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HomeMy WebLinkAbout08-28-01 City of Lakeville Economic Developmen# Commission Regular Meeting Agenda.. Tuesday, August 28, 2001, 6:00 p.m. Lake Marion Conference Room, Community Development Department City Hall, 20195 Holyoke Avenue 1. Call meeting to order. 2. Approve June 19, 2001 meeting minutes. 3. Work Session. with City. Council A.) The 2002-2004 Strategic Plan for Economic Development 1.) The Process -Bob Vogel. 2.) The Producf-Ann Flad 3.) City Council's comment and approval 4. Status Update on Strategic Plan Items: A.) Incentives Subcommittee B.) Labor Force Committee C.) High Tech Subcommittee 5. _ Identify process for developing Strategic Work Plans. 6. Metro East and Dakota County'Economic Development Partnership membership .update. 7. Manufacturer's Week 2001 -tentative activities. 8. .Revolving. Loan Fund financing of Marquette Bank's acquisition of the car wash/laundromat in downtown Lakeville to be redeveloped as a parking lot... 9. Timbercrest update. 6. Adjourn. G:\AFlad\Econdev projects\EDC\2001mtgs\8August\082801 agenda.doc 1 For Your Information: Letter from GE Capital. regarding 5.9% Fixed Rate Financing for Manufacturing Facilities and Equipment. Energy Reliability Update. Partners For Affordable Energy, July 20, 1001. E-News from Colliers Towle Real Estate. Attachments: "Get Smart on Smart Growth." Minnesota Shopping Center Association. "Neighborhoods," Dakota County Community Development Agency. "The Other Side of TfF." Star Tribune, Sunday, August 19,2001, D-11. "Airlake Receives Fiber Optic Connection." Lakeville .This Week-Life & Times, August 18, ` 2001, 30-A. "Tech Bust Leaves Hole in Real Estate Market." Minnesota. Real Estate Journal, July 23, 2001, 16. "Lights Out?.".Minnesota Real Estate Journal, July 23, 2001,10-11. "Woodbury Opens up .950 Acres." Minnesota Real Estate Journal, July 9, 2001, 12. "By the Ways." Minnesota Real Estate Journal, July 9, 2001. "New Tax Structure Big Win for Business." City Business, July 6, 2001. "Considering the Alternatives." Fedgazette, July 2001, 16: "Anchor Bancorp Secures Lakeville Location." CityBusiness, June 22, 2001, 7. G:1AFIad\Econdev projects\EDC\2001 mtgs\BAugust\082801 agenda.doc 2 Economic Development Commission Meeting Minutes June 19, 2001 D~ City of Lakeville Economic Development Commission Meeting Minutes June 19, 2001 7:00 a.m. Community & Economic Development Conference Room Members Present: Vogel, Emond, Tushie, Pogatchnik, Brantly, Matasosky, Schubert, - Miller, ex-officio member Bornhauser. Members Absent: Erickson. Others Present: Robert Erickson, City Administrator; Arlyn trussing, Community & Economic Development Director; Ann Flad, Economic Development Coordinator. 1. Call Meeting to Order. Chair Vogel called the meeting to order at 7:02 a.m. in the Marion Conference Room at City Hall, 20195 Holyoke Avenue, Lakeville, MN. 2. Approve May 22, 2001 meeting minutes. Motion 01.17 Comms. Pogatchnik/Emond moved to approve the minutes of the May 22, 2001 meeting.. Motion carried unanimously. 3. Strategic Planning: At the May EDC meeting, Commissioners categorized twenty-one critical issues into four strategic work areas as outlined below: Infrastructure • Interchange priorities for 60-70-50 • Need for major transportation arteries in the city including the need to provide adequate access to commercial/retail/industrial areas • I-35 Corridor enhancements • Explore issues related to East-West Corridor • Implementation of Gateway and Corridor Plan -need defined plan for implementation • Investigate/encourage expansion of airport and rail opportunities and their impact on the C/I community Communication • Continue to partner with Lakeville Chamber and DLBA for promoting Lakeville's identification - "Where we are located." • Inform and educate residents on benefits of C/I base to gain community support and appreciation for business growth 1 G:\AFlad\Econdevprojects\EDC\2001mtgs\6June\061901 minutes.doc Economic Development Commission Meeting Minutes June 19, 2001 • Anticipate emerging/future city economic development issues and develop a proactive solution Financial • Financial planning for community -encourage community partners -schools, city, county, state, etc. to provide input to crate basic financial models that can be used to visualize and measure potential threats, outcomes, and overall impacts of our efforts to improve financial position of city in future. • Need to have a proactive budgeting process for EDC • Promote growth of industrial and commercial development to encourage balance between C/I and residential tax base Growth/development • Affordability of land • Encourage investigation of all potential upgrade opportunities in critical "business infrastructure" elements -phone, data, and other infrastructure, to promote positive outcomes for long term. • Identify solutions for affordable housing • Make use of Southern Gateway opportunities and proximity to both metro areas • Work to retain the historical flavor of downtown area, developing it into a vibrant business community and ensuring its long term viability • Develop specific marketing for commercial growth • Remain committed to policies of quality strategic growth • Current lack of retail • Encourage the use of development tools, e.g.: PUD's to integrate city design standards with new developments to achieve overall consistencies. Prior to this meeting, Commissioners received a fax requesting them to rank the issues in order of importance within each of the four Strategic Work Areas, and .then identify the top five most pressing issues overall for the EDC to address, based on the mission statement of the EDC: The Economic Development Commission is committed to innovative economic growth which enhances the quality of and provides balance to the business and residential community. By ranking and prioritizing the most pressing issues, the following strategic issues have been identified as the most critical for the EDC to address: Rank in Category Most Pressing Growth • Interchange priorities for 60-70-50 1 1 _ _ • Need for major transportation arteries in the city 2 3 including the need to provide adequate access to commercial/retail/industrial areas _ • Promote growth of industrial and commercial _ 1 2 development to encourage balance between C/I and residential tax base Page 2 of 5 Economic Development Commission Meeting Minutes • June 19, 2001 • Remain committed to policies of quality strategic 1 4 growth _ _ _ Finance _ • Identify solutions for affordable housing. 2 5 The Commissioners suggested combining the first two issues under into one transportation category. They also suggested that the last issue, "Identify solutions for affordable housing" may be better represented as a tactic to foster a balanced community. Chair Vogel read the remaining issues and the Commission determined it was appropriate to list them as tactics under one of the four categories. The results are as follows: Growth 1. Enhance major transportation facilities in the city • Interchange priorities for 60-70-50 • Need for major transportation arteries in the city including the need to provide adequate access to commercial/retail/industrial areas • I-35 Corridor enhancements. • Explore issues related to East-West Corridor • Implementation of Gateway and Corridor Plan -need defined plan for implementation • Investigate/encourage expansion of airport and rail opportunities and their impact on the C/t community 2. Promote policies of quality strategic growth • Encourage investigation of all potential upgrade opportunities in critical "business infrastructure" elements -phone,. data, and other infrastructure, to promote positive outcomes for long term. • Encourage the use of development tools, e.g.: PUD's to integrate city design standards with new developments to achieve overaN consistencies. • Continue to partner with Lakeville Chamber and DLBA for promoting Lakeville's identification - "Where we are located." • Anticipate emerging/future city economic development issues and develop a proactive solution 3. Foster a balanced community • Inform and educate residents on benefits of C/I base to gain community support Page 3 of 5 Economic Development Commission Meeting Minutes June 19, 2001 and appreciation for business growth. • Identify solutions for affordable and lifestyle housing. • Work to retain the historical flavor of downtown area, developing it into a vibrant business community & ensuring its long-term viability. • Make use of Southern Gateway opportunities and proximity to both metro areas • Develop specific marketing for commercial growth Finance 4. Promote growth of industrial and commercial development to encourage balance between C/l and residential tax base • Financial planning for community -encourage community partners -schools, city, county, state, etc. to provide input to create basic financial models that can be used to visualize and measure potential threats, outcomes, and overall impacts of our efforts to improve financial position of city in future. • Need to have a proactive budgeting process for EDC • Affordability of land • Current lack of retail Once the EDC approves of these issues, they will be presented at a City Council work session in August. If approved by the City Council, they will form the basis of the EDC's 2002-2003 Strategic Work Plan. 5. Status Update on Strategic Plan Items: A.) Incentives Subcommittee: Mr. Grussing informed Commissioners that this month's agenda packet included a copy of Springsted's draft Incentive Study. Commissioners are asked to review the study and forward comments to Mr. Grussing within two weeks. The Incentives Subcommittee will review the study and Commissioner's comments at an upcoming meeting. 6. Metro East and Dakota County Economic Development Partnership Social Events Mr. Grussing reported that Metro East Development Partnership is having a golf tournament on Monday, August 13, 2001 at Hastings Country Club. Additionally, the Dakota County Economic Development Partnership will be holding their golf tournament on August 27, 2001 at Crystal Lake Golf Club in Lakeville. Commissioners Emond and Pogatchnik, along with Mr. Grussing and Mr. Erickson will participate in the DCEDP tournament. 7..Adjourn. The meeting was adjourned at 8:00 a.m. Respectfully submitted by: Attested to: Page 4 of 5 Economic Development Commission Meeting Minutes • June 19, 2001 Ann Flad, Recording Secretary R.T. Brantly, Secretary Page 5 of 5 Item 1tT© ~~4 MEMORANDUM TO 'ECONOMIC DEVELOPMENT COMMISSIONERS CC: ROBERT ERICKSON, CITY ADMINISTRATOR ARLYN GRUBBING, COMMUNITY & ECONOMIC DEVELOPMENT DIRECTOR FR: ANN FLAD, ECONOMIC DEVELOPMENT`COORDINATOR,~ DATE: AUGUST 22, 2001 RE: 2002-2OD4 Strategic Plan for Economic Developmenf` Thee Economic Development Commission has been developing and implementing strategic plans since 9 995. These plans provide focus and guidance to the EDC's efforts. 1n Apri1, 2001, a, planning process was undertaken to develop a 2002-2004;p1an that would` reflect the changing environment in Lakeville. In order for the EDC to be well-in#ormed when developing their plan,, they began by gathering information. Specifically, they reviewed the previous plan, the history of the: EDC and the City .Council's priorities (developed at the Council's 2000 re#reat.) This information was then considered when the Commissioners defined the EDC. The Vision and the Mission of the EDC reflect the Commission's character and purpose and every action undertaken by the EDC must be consistent with he Vision and Mission. The EDC then began identifying the Strategic. Work Areas they wou d develop action plans around. A draft of the first three stages of the 2002-2004 Strategic Plan for Economic Development reflects these discussions in detail and is attached for your reference. Because it is very important that: the EDC's efforts have the support of the Council and are consistenf with the City'Council objectives, the EDC is requesing the City Council approve the Mission, Vision, and the four Strategic Work Areas outlined in the attached document. Upon Council approval, the EDC will develop the fourth stage of the plan which entails drafting more specific action steps or work plans for each of the four areas. These work plans will be incorporated into the final 2002-2004 Strategic Plan for Economic Development and will be presented to he City Council for final, approval this fall . , i ECONOMIC DEVELOPMENT COMMISSION STRATEGIC PLAN FOR ECONOMIC DEVELOPMENT 2002-2004 Presented to City Council: August 28, 2001 -1- STRATEGIC PLAN - TA6LE OF CONTENTS 1. INFORMATION GATHERING Introduction and History of the EDC's Strategic Planning Efforts 4 Historical Timeline of the Economic Development Commission 5 2000-2001 Strategic Work Plan Strategies 6 Progress and Achievements of the 2000-2001 Strategic Plan 7 I1. THE 2002-2004 STRATEGIC PLAN FOR ECONOMIC DEVELOPMENT The Strategic Planning Process Flowchart 10 Participants in the Strategic Planning Process 11 Defining the EDC Vision 12 Mission 13 Identifying Work Areas SWOT Analysis 14 City Council Priorities that are Relevant to Economic Development 15 Significant Issues Facing the Economic Development Commission 16 Critical Issues Facing the EDC in 2002-2004 and Beyond 18 Strategic Work Areas for 2002-2004 19 111. THE 2002-2004 STRATEGIC WORK PLAN (to be completed) -2- I. INFORMATION GATHERING -3- INTRODUCTION AND HISTORY OF THE EDC'S STRATEGIC PLANNING EFFORTS The Economic Development Commission has a rich heritage of planning for the economic future of Lakeville dating back to the first Strategic Plan completed in 1995. The EDC continues to undertake a Strategic Planning process biannually. This process includes reviewing the Commission's progress on the previous plan's goals, examining the current issues facing the community, and drafting a new Strategic Work Plan. The 2002-2004 Strategic Plan for Economic Development continues that tradition of thoughtful and organized planning for the economic future of Lakeville. Strategic Plans have enabled the Commission to focus their efforts and accomplish tangible results. Activities that are now considered a standard part of Lakeville's Economic Development program were conceived through earlier strategic planning processes, including the "recruitment of businesses whose executives already live in Lakeville", the development of "additional executive-level housing for new incoming residents", "Development Project Feedback Surveys", and "targeted marketing materials including marketing videos." The 2000-2001 Strategic Plan for Economic Development articulated three primary goals for the EDC: © Attract and retain employers and workforce to diversify the economic base. © Manage growth and the city processes to enhance the quality of life and sense of community. 4 Position Lakeville for long-term economic expansion. -4- Historical Timeline of the Economic Development Commission 84 The EDC was started as a component of the Star Cities Program 90 Direction started by EDC members; Council hires first EDC Director 92 First Strategic Growth Task Force sets Economic Development goals including fiscal impact analysis 93 First Economic Development Specialist is hired 95 Second Strategic Growth Task Force; First EDC Strategic Plan adopted by the City Council for 1996-1997 96 First Marketing Plan Developed 97 Second EDC Strategic Plan adopted for 1998-1999 99 EDC starts to act at subcommittee level; Third EDC Strategic Plan adopted by the City Council for 2000-2001 Ol Integration of Council's priorities into EDC Strategic Plan; Chamber increases involvement ;EDC has authority to utilize funding once budget is approved by the City Council; EDC serves at the pleasure of Council to work toward common goals; Annual report of progress/accomplishments with ongoing regular communication -5- 2000-2001 Strategic Work Plan Strategies Eleven strategies were outlined in the 2000-2001 Work Plan, along with specific actions and steps the EDC would undertake to achieve those goals. The strategies are listed below. 2000-2001 Strategic Work Plan Strategies • Develop and implement vision for Lakeville's retail and service sectors • Ensure an adequate supply and diversity in housing opportunities • Maintain long-term vitality of the Historic Downtown • Develop Strategies to attract and retain employers that will utilize the skills of the residents • Encourage additional office park/business campus and home-based business sector development to achieve desired business mix • Identify resources to meet employers' recruitment and retention needs • Implement strategies to ensure Lakeville's infrastructure is adequate to meet current and future business needs • Develop and maintain policies and programs that improve Lakeville's capacity for Economic Development • Develop and monitor policies that promote quality growth • Enhance and maintain communication efforts with stakeholders • Implement Strategies to Maintain Quality Customer Service -6- Progress and Achievements of the 2000-2001 Strategic Plan The EDC's success in utilizing the 2000-2001 strategies was reviewed in February, 2001. Progress was made on every strategy outlined in the Strategic Work Plan, as indicated below: ? Ongoing conversations with developers of upscale grocery stores. ? Referral of prospects to Aurora Investments d.b.a Heritage Commons. ? Successfully encouraged incorporation Heritage Commons Design Guidelines info the design for U. S. Bank. ? Successfully encouraged the United States Postal Service to develop a retail facility at Heritage Commons. ? Provided CDBG funds to acquire site for an additional 31 unit affordable rental townhouse development. ? City approved first market-rate apartment development. ? Diversity of housing opportunities enhanced by the approval of more attached townhouse developments than single-family developments. ? Assisted developer in evaluating methods to construct proposed Dominium affordable housing project. ? Provided CDBG funds for the upgrade of the Smith Dentistry building and the former A+ Driving School building consistent with the Historic Fairfield District of Downtown Lakeville Design Guidelines. ? Broke ground on a senior housing mixed use facility, bringing more people and more retail space to downtown. ? Completed Labor Force Focus Group Study which surveyed businesses on retention and recruitment issues. ? Developed a High Tech Subcommittee to explore the possibility of a developing a High Tech Business Park. ? Completed a survey of businesses' telecommunications uses and projected needs; identified strategies to address needs. ? Identified strategies to support employer recruitment of labor. ? Held two meetings with manufacturing businesses to present labor recruitment strategies and determine interest. -7- 11. THE 2002-2004 STRATEGIC PLAN FOR ECONOMIC DEVELOPMENT -9- ? Fostered leadership among Airlake businesses via the HR Committee of Chamber to implement strategies. ? Researched labor force recruitment web site options, billboards, logos, developed budget, applied for grant to support project. ? Provided information via Airlake News regarding training and education opportunities. ? Determined via survey that childcare is not a major barrier to employment in Lakeville. ? Encouraged development of new hanger and service options for corporate flights. ? Explored EDC's ability to use Revolving Loan Funds to incentives the development of new facilities, eg: FBO and corporate hanger. ? Met with fixed based operator to encourage enhancement of facilities and service. ? Met with Jeff Hamiel, Executive Director of the Metropolitan Airports Commission, Gary Schmidt, Director of Reliever Airports for MAC, and Bridget Reif, Airside Project Manager for MAC, regarding options for enhancing facilities and service at Airlake Airport. ? Met with Reliever Airports Manager Jack Eberlien regarding proposal to construct a new hanger with facilities to accommodate corporate flights. ? Formed Park Dedication Subcommittee to ascertain the City's ability to use park dedication fees to accomplish Corridor and Gateway designs. ? Joint subcommittees were established with other advisory boards and City departments, including the Park Dedication Subcommittee with the Parks and Recreation Advisory Committee, the High Tech Subcommittee with the Telecommunications Commission, and the South Creek Subcommittee with the Environmental Affairs Committee. ? Bi-monthly business development status information provided for Transactions, the Chamber of Commerce Newsletter. ? Quarterly publication of Airlake News for manufacturing businesses, also sent to all Chamber members. ? Non-Residential Development Project list updated quarterly and provided to realtors, brokers, etc. ? Incentive subcommittee convened to study incentive options. ? Updated Park Dedication fees with input from Airlake Development. -8- THE STRATEGIC PLANNING PROCESS I. Information Gathering Review of Previous Plan History of the EDC - Bob Erickson City Council's 2000-2001 Perspective: Council Priorities - Accomplishments Mayor Bob Historical Timeline Johnson FOUr Council Priorities II. Define the EDC Vision ~ What will the EDC be like? Characteristics Mission What is the EDC's Statement purpose? III. Identify the Strategic Work Areas SWOT Analysis of Lakeville Brainstorming: Significant Issues that will Impact Economic Development Consolidation of Significant Issues into Critical Issues Ranking and Prioritizing Critical Issues Resulting in Strategic Work Areas IV. Incorporate Work Plans Outline Proposed EDC Four Actions to be taken on Strategic Work Areas ~ the Strategic Work Identified Areas ONGOING 2002-2004 IMPLEMENTATION OF Strategic Plan for WORK PLANS Economic RE-EVALUATE Development - ANNUALLY final document Participants In The Process The Strategic Plan for Economic Development is a written three year plan that guides the work of the Economic Development Commission and Economic Development staff in achieving the growth objectives of the City of Lakeville. In order to develop a living/working plan it is imperative to have open communication between the elected community leaders and the EDC to establish agreed upon priorities. It is also important to understand the historical context in which the EDC was formed and continues to operate, as outlined earlier in this document. The process of developing a new plan for the 2002-2004 biennium began in April, 2001. Many elected and appointed officials and staff committed their time, talent and energy to creating a strategic plan that would position Lakeville well in the future. Robert Johnson, Mayor Bob Vogel, Economic Development Commission Chair Bob Brantly, Economic Development Commissioner Jim Emond, Economic Development Commissioner Jerry Erickson, Economic Development Commissioner Jack Matasosky, Economic Development Commissioner Dick Miller, Economic Development Commissioner Parry Pogatchnick, Economic Development Commissioner Jeannie Schubert, Economic Development Commissioner Gary Tushie, Economic Development Commissioner Robert Erickson, City Administrator Arlyn Grussing, Community & Economic Development Director Ann Flad, Economic Development Coordinator Todd Bornhauser, Ex-Officio Economic Development Commissioner; Executive Director -Lakeville Area Chamber of Commerce -11- Vision Every organization needs a vision of how it will operate and a clear mission that it is dedicated to achieving. Therefore, the Commissioners gathered in April to articulate a vision and outline a mission for the EDC. Mayor Bob Johnson and City Administrator/ Ex-officio Commission Bob Erickson provided background on the EDC and information on the City Council's current priorities. The Commissioners discussed how they envisioned the EDC operating and determined the characteristics that would define the Commission. The EDC is committed to operating in the manner described by the following vision characteristics. THE EDC'S VISION IS TO 6E Creative And Innovative Credible Facilitators Of Change Providers Of Outcomes To Achieve Lasting Impact Providers For A Better Community Promoters Rather Thnn Policy Makers Builders Of Relationships Between Businesses And Residents Successful Facilitators Of Council Initiatives Anticipatory Of Difficult City Issues And Developers Of Proactive Solutions Identifiers Of Issues Before They Become A Problem Aggressive Innovators -12- Mission Just as a vision helps an organization define how it will operate, a mission is necessary in order to be clear on the purpose of an organization. The Commission determined whether the EDC should have a role in addressing the Council's priorities based on the mission of the Commission. Additionally, every issue and action item that the EDC undertakes must be consistent with the EDC's stated mission. Below is the mission statement from the previous Strategic Plan and a new mission statement which will carry the EDC into the future. Mission Statement From the 2000-2001 Strategic Plan The Economic Development Commission is committed to programs and policies which enhance the quality of the business and residential community. Lakeville is a great place to grow a business! Understanding the historical perspective of the EDC and the vision of how the Commission will operate allowed the EDC to evaluate their existing mission statement and its relevance for the future. Anew mission statement was developed which reflects the Commission's charge to be proactive and to achieve balance in the community. PROPOSED EDC MISSION STATEMENT The Economic Development Commission is committed to innovative economic growth which enhances the quality of, and provides balance to, the business and residential community. -13- S.W.O.T. Analysis Because the EDC has successfully achieved many of its previous goals, and because Lakeville is a growth community, the dynamics and issues that will be influencing the community in the next several years have changed since the previous Strategic Plan was written. The Commissioners examined the current Strengths, Weaknesses, Opportunities and Threats to Lakeville in order to better understand the dynamics that will influence development in the next few years. STRENGTHS OF LAKEVILLE Diversity of EDC members' backgrounds Infrastructure needs relative to resources Available land for growth Retail growth beginning Past planning (Gateway, Heritage) Freeway corridor Southern Gateway to the Metro Proximity to both metro areas WEAKNESSES OF LAKEVILLE High Tech infrastructure Deficient airport runway Shortage of affordable housing Current lack of retail I-35 is an outdated road design OPPORTUNITIES FOR LAKEVILLE New growth On retail cusp In the center of any east-west corridor THREATS TO LAKEVILLE Urban sprawl Regional government Public opinion against development Tax base growth outpaced by development Increasing land prices causes growth cap -14- City Council Priorities That Are Relevant to Economic Development The EDC recognizes that the City Council has many issues to consider, and many advisory groups to help examine these issues and recommend actions to be taken. As a commission appointed by the City Council in an advisory capacity, the Economic Development Commissioners must understand the City Council's concerns and priorities. Additionally, the EDC recognizes that in order to be an effective Commission, they must focus their efforts on the priorities that are most closely related to the EDC's mission of fostering "innovative growth which enhances the quality of and provides balance to the business and residential community." The EDC thus reviewed the City Council's priorities and identified the four priorities which are most relevant to the EDC's mission. The four priorities are listed below and are not in any particular order. ? Property Tax New growth of commercial-retail tax base Broaden tax base by use of high tech opportunities ? Transportation Interchange priorities: 60-70-50 Strategic Placement of major east-west corridor County and City CIP Implementation ? Communication Media tools to spur commercial growth Blend amenities with economic impacts of community development Communicate economic development successes ? Growth Provide balance in the community Pace of growth relative to infrastructure, schools, taxes, transportation, etc. Provide affordable housing stock Downtown viability-vitality -15- Significant Issues Facing The Economic Development Commission The City Council's priorities include tax base, transportation, communication and growth. Keeping in mind the strengths, weaknesses, opportunities and threats that were identified at the April EDC meeting, Commissioners listed their top five to ten significant issues facing the EDC. Fifty-seven issues were submitted as follows: • Interchange priorities for 60-70-50 • Need for major transportation arteries both city and regionally • How to provide adequate access to commercial/retail areas (ie: roads) • Interchange Upgrades (70, 60, 50) • I-35 Corridor enhancements • Need to upgrade 70&35 asap to provide better access to Airlake -costs may prevent this. • Follow plans for major east-west corridor -strategic placement • Affordability of land and major local road upgrades • Once east-west corridor has been identified by county we need to revisit proposed adjacent land uses. • Transportation - I-35 Interchanges/East/UVest Corridor • Infrastructure needs relative to resources • Commercial/retail property tax base growth may noy be accomplished because of infrastructure costs. • Infrastructure needs relative to resources • Encourage investigation of all potential upgrade opportunities available in critical "business infrastructure" elements required -phone, data, etc. and promote positive outcomes for long Perm! • High Tech Infrastructure: sooner or later this will be an issue • High Tech Infrastructure • Technology Infrastructure • Support efforts for additional low cost housing • Shortage of affordable housing • Affordable housing -being able to finance it and provide enough • Where and who can help the City develop more affordable housing • Implementation of gateway corridor plan: no defined plan for implementation • Continue to partner with Lakeville Chamber and DLBA for promoting Lakeville's identification ie: "Where we are located" • Proximity to both metro areas • Make use of "Southern Gateway" opportunities • Financial Planning for Community -encourage community partners -schools, city, county, state, etc. to provide input to create basic financial models that can be used -16- to visualize and measure potential threats, outcomes and overall impacts of our efforts to improve financial position of the City in the future. • What if scenario for each $ spent in Lakeville retail vs. residential vs. industrial, etc. • Partner with schools to minimize adverse levy impacts • Working with the school district(s) • Our (EDC) budget for projects (cost vs. benefit) • Downtown viability • Long term viability of downtown - no one or entity is taking lead role • Work to retain the historical flavor of downtown area, yet develop it into a vibrant business community - • Help residential population appreciate C/I residents - "P.R." for business community • Create and use aggressive innovations to build relationship between business and residents • Keeping the citizens informed and accounted for on growth issues • Gaining community support for future retail/office/industrial growth • Use media tools to spur commercial growth • New Growth • The need to encourage creative financial options to develop affordable housing and to encourage new commercial/industrial/retail growth • Remain committed to the philosophy of quality strategic growth • New growth • Continue to promote Lakeville's growth rather than be a policy maker • Ability to control growth like Heritage Commons. Ordinance does not provide for this in other critical areas ie: 35 W Corridor. • Urban sprawl: pressure to get additional tax base may allow commercial development that we do not want in the long term. • The need to initiate and develop projects that will generate a healthy tax base • Current lack of retail • Pace growth -Allow commercial/industrial sector to keep pace with residential • Balance between C/I and residential tax base • How to increase the retail/commercial tax base • Impact of property tax needs for school, city and county • Promote new growth of industrial and commercial development to enhance tax base • Tax base growth outplaced by development • Investigate/encourage expansion of Airport and rail opportunities and their impact on C/I community • Ability to upgrade airport to accommodate corporate aircraft -MAC is roadblock • Anticipate difficult city issues and develop proactive solution • Identify city issues before they become a problem -17- Critical Issues Facing The EDC in 2002-2004 And Beyond Because there was overlap, the Commissioners consolidated the significant issues to the twenty-one most critical issues. The following critical issues were identified and also placed into related categories as listed below: Infrastructure • Interchange priorities for 60-70-50 • Need for major transportation arteries in the city including the need to provide adequate access to commercial/retail/industrial areas • I-35 Corridor enhancements • Explore issues related to East-West Corridor • Implementation of Gateway and Corridor Plan -need defined plan for implementation • Investigate/encourage expansion of airport and rail opportunities and their impact on the C/I community Communication • Continue to partner with Lakeville Chamber and DLBA for promoting Lakeville's identification - "Where we are located." • Inform and educate residents on benefits of C/I base to gain community support and appreciation for business growth • Anticipate emerging/future city economic development issues and develop a proactive solution Financial • Financial planning for community -encourage community partners -schools, city, county, state, etc. to provide input to crate basic financial models that can be used to visualize and measure potential threats, outcomes, and overall impacts of our efforts to improve financial position of city in future. • Need to have a proactive budgeting process for EDC • Promote growth of industrial and commercial development to encourage balance between C/I and residential tax base Growth/development • Affordability of land • Encourage investigation of all potential upgrade opportunities in critical "business infrastructure" elements -phone, data, and other infrastructure, to promote positive outcomes for long term. • Identify solutions for affordable housing • Make use of Southern Gateway opportunities and proximity to both metro areas • Work to retain the historical flavor of downtown area, developing it into a vibrant business community and ensuring its long term viability • Develop specific marketing for commercial growth • Remain committed to policies of quality strategic growth • Current lack of retail • Encourage the use of development tools, e.g.: PUD's to integrate city design standards with new developments to achieve overall consistencies. -18- Strategic Work Areas for 2002-2004 By ranking and prioritizing the most pressing issues, the following four strategic work areas have been identified as the most critical for the EDC to address. If approved by the City Council, the strategic work areas and their respective critical issues will form the basis of the EDC's 2002-2004 Work Plan. Note: the remaining issues were incorporated as tactics to address the four priority issues below. Once the City Council endorses the EDC Strategic Issues, specific work plans addressing each item will be developed and included in the 2002-2004 Strategic Plan for Economic Development. The entire plan will be brought to the City Council for approval. -19- STRATEGIC WORK AREA: Enhance Ma'or J Trans ortation Faci I ities p In The Ci ISSUES TO BE ADDRESSED: Interchange priorities for 60-70-50 Need for major transportation arteries in the city including the need to provide adequate access to commercial/retail/industrial areas I-35 Corridor enhancements Explore issues related to East-West Corridor Implementation of Gateway and Corridor Plan -need defined plan for implementation Investigate/encourage expansion of airport and rail opportunities and their impact on the C/I community -20- STRATEGIC WORK AREA: Promote Policies O ua I i Strate i c Growth 9 ISSUES TO BE ADDRESSED: Encourage investigation of all potential upgrade opportunities in critical "business infrastructure" elements -phone, data, and other infrastructure, to promote positive outcomes for long term. Encourage the use of development tools, e.g.: PUD's to integrate city design standards with new developments to achieve overall consistencies. Continue to partner with Lakeville Chamber and DLBA for promoting Lakeville's identification - "Where we are located." Anticipate emerging/future city economic development issues and develop a proactive solution -21 - STRATEGIC WORK AREA: Foster A balanced Communi ISSUES TO BE ADDRESSED: Inform and educate residents on benefits of C/I base to gain community support and appreciation for business growth. Identify solutions for affordable and lifestyle housing. Work to retain the historical flavor of downtown area, developing it into a vibrant business community & ensuring its long-term viability. Make use of Southern Gateway opportunities and proximity to both metro areas. Develop specific marketing for commercial growth. -22- STRATEGIC WORK AREA: Pro ote Growth O m Industrial And Co ercial mm ~evelo ent To Encoura e pm 9 Gala ce 6et een C/I And n w Residential Tax base ISSUES TO BE ADDRESSED: Financial planning for community -encourage community partners - schools, city, county, state, etc. to provide input to create basic financial models that can be used to visualize and measure potential threats, outcomes, and overall impacts of our efforts to improve financial position of city in future. Need to have a proactive budgeting process for EDC Affordability of land Current lack of retail -23- III. THE 2002-2004 STRATEGIC WORK PLAN (to be completed) -24- Item loo. MEMORANDUM TO: ECONOMIC DEVELOPMENT COMMISSIONERS CC: ROBERT ERICKSON, CITY ADMINISTRATOR ANN FLAD, ECONOMIC DEVELOPMENT COORDINATOR f FR: ARLYN GRUBBING, COMMUNITY & ECONOMIC DEVELOPMENT DIRECTOR DATE: .AUGUST 22, 2001 RE: Financial Incentives Update Springsted has completed several components of the Financial Incentives Study (see attached letter from Springsted.) Specifically, Springsted has determined the EDC's objectives for the program (item 1 developed a document, or matrix, outlining the range of incentives (item 3), and provided broad background information on each incentive option in document form (item 8). These completed items have. been compiled into a draft document entitle "Lake~,rille Economic Development Commission Financial Tools Program." Also, the draft includes more specific information on Levy Authority, New Legislative Changes for 2002, and an updated Park and Trail Dedication Funds sections. The Financial Incentives Subcommittee will be reviewing this final draft and providing recommendations to the EDC at their September 25, 2001 meeting. 85 SEVENTH PLACE EAS"l; SUITE 100 SAINT PA[.tL, MN 55101-2887 1;51.223.3000 FAX: 651.223.30x_' E-MAIL: advisors(a~springsted.rnm SPRINGSTED Advisors to the Public Sector .May 25, 2001 Mr. Arlyn Grussing, Community & Economic Development Director City of Lakeville 20195 Holyoke Avenue Lakeville, MN 55044-8339 Re: Refined Proposal on Economic Development Financial Incentives Program Dear Mr. Grussing: The purpose of this letter is to refine our original scope of services based upon what will soon be completed within the Financial Tools Study report. As per original scope of services: 1. Meeting with City staff and/or EDC, City Council to determine objectives and parameters for this program. • Complete 2. Review of historical practices, current programs and estimated current financial capacity to provide financial incentives of this nature. • Not complete 3. Provision of background information materials on the range of such incentives covering suburban, municipal, state and federal programs. • Complete 4. Determine how to interface incentive policies with current economic development plans and City's Comprehensive .Plan. • Complete 5. Discussion with City staff and/or EDC, City Council on the various programs, their trade- offs, application to Lakeville's objectives and target industries, and potential impacts on the City's resources and objectives. • Partially complete CORPORATE OFFICE: SA[NTPAUL, MN Visit our website at www.springsted.com DES MOINES, IA MILWAUKEE, WI MINNEAPOLIS, MN OVERLAND PARK, KS VIRGINIA BEACH, VA WASHINGTON, DC City of Lakeville, Minnesota May 25, 2001 Page 2 6. Refinement of a list of programs for specific application in Lakeville, with a comprehensive profiling of uses and impacts for final acceptance by EDC and City. • Not complete 7. Discussion of any related City fees for specific types of incentives. The City may wish to review its system. of cost recovery or revenue diversification for its activities for various incentive programs. These fees can become an asset base to fund .related activities or staff costs... This scope provides for a general review of such fees, not a complete cost recovery system. • Not complete 8. Development of program informational materials for administration by EDC and/or City staff. This scope would provide a general information piece on the City's overall program, with broad profile text on each individual program. The scope would not include actual program development for such complicated areas such as revolving loan funds. • Complete 9. Development of any financial modeling for evaluation of individual applicants and overall impact on City financial resource capacities. • Ongoing 10. Integration of financial incentive .program into City management structure, i.e. senior management, economic development and finance management. • Complete We envision accomplishing the final tasks identified above as either "not complete" or "partially complete" through our attendance at requested EDC or City Council meetings, or participation in discussions with staff regarding future policy development. Other issues will be addressed in a letter of conclusion/recommendations to be submitted with the final version of the Financial Tools study. Please let either of us know if you have questions or comments. Sincerely, . i' 1 - David N. MacGillivray Paul T. Steinman Chairman Vice President cc: Mr. Bob Erickson, Administrator Ms. Ann Flad, Economic Development Coordinator Mr. Dennis Feller, Finance Director. Item l~o.,~. ~ MEMC>RANaUM TO: ECONOMIC DEVELOPMENT COMMISSIONERS CC: ROBERT ERtCKSON, CITY ADMINISTRATOR AR~YN GRUBBING, COMIMUNITY & ECONOMIC DEVELOPMENT DIRECTOR FR: ANN FLAD, ECONOMIC DEVELOPMENT COORDINATOR DATE: AUGUST 22, 2001 RE: LABOR FfJRCE SUBCQMMITTEE The Labor ForcelHR Committee met in June to review the status of the JobslnLakevilfe.cornproject. Presentwere representatives from Ryt-Way Industries, :Menasha Gorp., Parker. Hannifin, Arden International Kitchens, the City of Lakeville and the Chamber of Commerce. At tfie May meeting, the committee chose to use NationJobs.com as the web site to .list job openings. biscussion ensued at the June meeting about the advertising costs the project would incur that are not included in the NationJobs fee. Todd Bornhauser of the Chamber indica#ed he would explore the cost and availablity of billboards outside of Lakeville. He wouldalso get a logo developed that Ms. Flad would use when developing; recruitmentlmembership materials (seep attached logoand draft brochure.) Economic changes have reduced the number of Airlake businesses hiring new employees, and some businesses report. layoffs. Therefore the committee will. be meeting to early September to discuss whether it infeasible to get. at least ten businesses to pay for a Jobsln~akevlle.com membership, and whether those businesses would advertise enough job openings to make the project successful.. Staff recommends that the project be postponed until businesses resume hiring. JOIN THESE LOCAL COMPANIES iN USING JobslnLakeville TO WHY USE JobslnLakevilie? RECRUIT YOUR NEW EMPLOYEES • .The cost of subscribing to JobslnLakeville is less than many companies pay annually to place Ryt-Way Industries employment ads in newspapers. MertaSha To run a single, five-line ad in the Merrlllat Northfield, Fairbault and Lakeville Arden International Kitchens newspapers for one weekend can Parker Hanrtiflrl total $327. ~ _ ~O i • The web site is easy for job seekers to Additional support for the navigate. development of this program has been contributed by: • Posting your jobs is easy. Use fax, e- mail or traditional mail to post jobs. The City of Lakeville The Lakeville Area Chamber • Advertising specifically markets Of Commerce openings in Lakeville, thus the jobs do People's Natural Gas COSt-effective F~eGruitirx~ not get lost on metro-wide or nation- wide lists. Dakota Electric of LOCaC Labor for • Prospective employees can find your job openings anywhere the internet or a telephone is available. HOW TO GET STARTED YOU/" Lakeville COmpar)y • Advertising will encourage commuters who are tired of being stuck in traffic to Call the Lakeville Area reverse their commute by taking a job Chamber of Commerce at in Lakeville (952) 469-2020 for more • .According to a studyby J. Walter information. Thompson, over 70% of active job seekers prefer the internet over other Or methods of job hunting. Attend an Informational Your positions will be posted on a web Meeting site geared specifically to job seekers at interested in the Lakeville area. XYZJKLAAFJKSAJFLKJDSA GKLARSJ t s , . WHAT IS "lnbslnLakevil/e"? HOW GOES 7obslntakevi!/e REACH LOCAL. JOB SEEKERS? ~.com lobslnLakevi//e is a labor force recruitment JobslnLakeville's advertising is geared tool designed especially for Lakeville toward recruiting local labor from Lakeville companies. This includes posting job and surrounding areas. Job seekers will be ANNUAL COST TO YOUR BUSINESS openings on a specific JobslnLakeville web directed to the JobslnLakeville web site and 70 SUBSCRIBE TO THE page on a national recruitment web site Jobs Hotline in the following ways: JobslnLakeville PROGRAM • Billboard advertisements - - (NationJob), aJobs Hotline, and Cable T.V. advertisements on 12 distribution of a list of positions available. It • The JobslnLakeville program's also includes effective advertising to reach major cable channels in the Charter annual cost to your business is less those job seekers interested in reversing Cable viewing area, including A&E, than many companies spend their commute and others interested in CNN, Comedy Central, ESPN, TNT, working in Lakeville. and others newspaper~ob openings in the • Direct mailings to area job seekers • Direct mailings to staffing services and Because of the relationship between the Workforce Center in Burnsville the Lakeville Area Chamber of • Local newspaper advertisement of the Commerce and NationJob, Lakeville HOW JobslnLakeville WORKS JobslnLakeville web site and Jobs Hotline businesses are able to subscribe at substantially reduced prices. Once you have subscribed to JobslnLakeville, all you have to do is fax ' fax, a-mail, or mail your job openings to WHAT YOUR BUSINESS RECEIVES NationJob. NationJob will post your WITH A SUBSCRIPTION # of Employees Annual Cost detailed job openings on the - - - Less than 25: $600 JobslnLakeville web page. Posting of unlimited job listings (up to 25-49 $800 250 at a time) 50-99 $1,000 • A company profile 100-199 $2,000 • A web site that can function as the 200-299 $4,000 ` employment section of your company's 300-399 $5,000 home page 400-499 $6,000 1_r-' • Additional posting of your jobs on more Over 500 $7,000 than 30 industry-specific web sites ra (Specialty Sites tm) 3 Party Recruiters: $4,000 ~ E-mailing of your job openings to matching job seekers from a database Of 500,000 (PJ SCOUt tm) (The price for NationJobs without going • POSting Of yOUf jobs On Yah00! through the JobslnLakeville program is $5,500 Job seekers view the web site and respond Classifieds, Alta Vista, and America's per company regardless of size. This does not directly to you. Job seekers without Job Bank include any local advertising and recruitment, Internet access can also locate the jobs Distribution of Our available ~Ob does not include the Jobs Hotline for those y 1 without Internet access, and does not include posted on the web site by calling the Jobs openings at locations throughout distribution of the list tnrougnout Lakeville.) Hotline and having a copy of the job Lakeville openings mailed to them. • Advertising geared toward job seekers most likely to look for a job in Lakeville y os . - -.com Items T~ o. MEMORANDUM TO: ECONOMIC DEVELOPMENT COMMISSION TELECOMMUNICATIONS COMMISSION CC: ROBERT ERICKSON, CITY ADMINISTRATOR ARLYN GRUBBING, COMMUNITY & ECONOMIC DEVELOPMENT ,DIRECTOR FR: ANN FLAD, ECONOMIC DEVELOPMENT COORDINATOR DATE: .AUGUST 22, 2001 RE .High Tech The High Tech Subcommittee met on August 8,2001. The joint subcommittee reviewed the High Tech Survey resulfs (see attached.) The Subcommittee originally distributed approximately 157 surveys to businesses located in Airlake Industrial Park, Fairfield Business Campus; and the McStop area. The survey was accompanied by a cover letter explaining the project, and was signed by the chairs of the Telecommunications Commission and the Economic Development Commission. These. surveys were sent to the primary contact for each company as represented in the City of Lakeville's database. Two methods of distribution were used: delivery via the U.S. Postal Service to approximately half of the companies, and delivery via e-mail to the remainder of the companies. The original response rate to the survey was low, with 14 companies (9%) responding to the survey. interestingly, the High Tech Subcommittee had used technology in the form of e-mail to distribute nearly half of the surveys, however this method of distribution received the lowest response rate (2 companies, or 1 % A second copy of the survey was sent to the same contacts at the same companies, however they were all sent via the U.S. Postal Service and they were accompanied by a letter from Mayor Bob Johnson requesting participation. The second distribution of the survey brought the response rate up to 27% (a total of 42 respondents.) Statistics were generated and a preliminary review by Dakota County Technical College Telecommunications Commission member and Telecommunications Instructor Doug Thompson revealed that additional responses would be needed in order to maximize the usefulness of this survey exercise. Mr. Thompson and staff completed additional 10 surveys via phone~~alls to companies chosen for their size or likelihood to have telecommunications infrastructure. These answers are incorporated into the final statistics listed below. A list of all companies that participated in the survey is attached for your information. The non-random selection of these companies lessens the ability to project the results of the survey onto the entire business population in the study area, however, the results of the survey do give the High Tech Subcommittee and others valuable information on the uses and needs of companies relative to telecommunications. Please note that Percentages may not total 100% due to rounding. Additionally, many statistics are not based on a response rate of 52 surveys. This is because each question was analyzed individually, and when appropriate, statistics were generated based on the number of answers to that particular question. When surveys were conducted by phone, several questions were skipped or .unanswered by the respondent, and thus the statistics generated for those questions were again based on the number of companies responding to the particular question. The committee concluded that "most companies do not need fiber at this time. but it would be helpful for the future." Specifically the committee felt further exploration of fiber would allow existing businesses to take advantage. of technological advances and would encourage new businesses to locate in - Lakeville. Staff will arrange to have the following service providers present information to the subcommittee: MCI WorldCom, Integra, Frontier, Charter, McCleod, Qwest, Hickory Tech, and AT&T. Providers will be asked to share information on their vision and plans for providing service in Lakeville, as well as information on the demographics that could trigger a market presence in the community. Staff will also develop a presentation to share with the service providers which explains the subcommittee's objectives and information on the market Lakeville currently has and anticipates in the future. The subcommittee also felt that educating the business and residential community. about telecommunications options could be a second phase of their efforts.. Responses to the surveys indicated thaf a number of businesses are paying for duplicative service without the need to do so. Many of these businesses also indicated they are not particularly knowledgeable about telecommunications and. their options. Thus assisting businesses (and residents)- in understanding what their needs and options are would provide a great benefit: to the community. Once the subcommittee meets with the service-providers, the subcommittee with. draft a statemen# to share with the businesses who responded to the survey and other interested parties. Additional methods of information distribution and education will also be explored. COMPANIES THAT .RESPONDED TO THE HIGH TECH SURVEY Stampings of Minnesota Jimmy's Auto Care Terra Products Custom Color Printing Hearth Technologies Marek's Towing & Repair Verified Credentials Inc. Anderson Consulting & Training, LLC Menasha Corp. Jeff Belzer's Todd Chevrolet Inc. Equine/Small Animal Medical Center Gold Star Printing Inc. Appro Development Granse & Associates Scruples Professional Salon Products, Inc. ISG Resources, Inc. Schneiderman's Furniture New Market Bank Valley Staffing. Farmers Insurance Performance Office Papers Wausau Supply Company Track II Corporation Atlas Specialized Tranpsort, inc. Flyteline Services, Inc.. Nichols & Associates Lakeville Area Public Schools Tee Jay North, Inc. Airlake Ford Mercury Inc. Rotadyne Performance Tool & Die St. John's Lutheran Church Craftline Mfg. Hoffman Custom Countertop Main Street Automotive Inc. Midland Equipment Ca Aerospace Fabrication & Materials, LLC Kiehm Construction Inc. Crown Cork & Seal Co. Inc. Quality Contour Inc. Viking Acoustical Corp. Advanced Metal Products, Inc. Super 8 Motel Imperial Plastics Motel 6 DHY QA1 Precision Products Rexa m Ryt-Way New Morning Windows Advanced Wireless DR Horton Technical Methods Merrillat PRELIMINARY RESULTS OF HIGH TECH SURVEY Attached are the preliminary results from the High Tech Survey. The Subcommittee originally distributed approximately 157 surveys to businesses located in Airlake Industrial Park, Fairfield Business Campus, and the McStop area. The survey was accompanied by a cover letter explaining the project, and was signed by the chairs of the Telecommunications Commission and the Economic Development Commission. These surveys were sent to the primary contact far each company as represented in the City of Lakeville's database. Two methods of distribution were_used: delivery via the U.S. Postal Service to approximately half of the companies, and delivery via a-mail to the remainder of the companies. The original response rate to the survey was low, with 14 companies (9%) responding to the survey. Interestingly, the High Tech Subcommittee had used technology in the form of e- mail to distribute nearly half of the surveys, however this method of distribution received the lowest response rate (2 companies, or 1 A second copy of the survey was sent to the same contacts at the same companies, however they were all sent via the U.S. Postal Service and they were accompanied by a letter from Mayor Bob Johnson requesting participation. The second distribution of the survey brought the response rate up to 27% (a total of 42 respondents.) Statistics were generated and a preliminary review by Telecommunications Commission member and Telecommunications Instructor Doug Thompson revealed that additional responses would be needed in order to maximize the usefulness of this survey exercise. Mr. Thompson and staff completed additional 10 surveys via phone calls to companies chosen for their size or likelihood to have telecommunications infrastructure. These answers are incorporated into the final statistics listed below. The non-random selection of these companies lessens the ability to project the results of the survey onto the entire business population in the study area, however, the results of the survey do give the High Tech Subcommittee and others valuable information on the uses and needs of companies relative to telecommunications. Please note that Percentages may not total 100% due to rounding. Additionally, many statistics are not based on a response rate of 52 surveys. This is because each question was analyzed individually, and when appropriate, statistics were generated based on the number of answers to that particular question. When surveys were conducted by phone, several questions were skipped or unanswered by the respondent, and thus the statistics generated for those questions were again based on the number of companies responding to the particular question. G:\AFlad\Econdev projects\High Tech subcommittee\responses on survey.doc Do you have Internet Access? Yes 49 No 4 If "Yes": Means of connectivity: 91 % of respondents reported having Internet access. 7% of respondents reported not having Internet access. 1. Dial-up Modem 23 2. ISDN 5 64Kbps 5 128Kbps ? 3. xDSL 14 Speed 128 kbps, 224, MBIT, and 256 4. Cable Modem ? 5. Frame-Relay 3 Speed 6. ATM ? 7. T-1 9 1.544 meg 8. Fractional DS-3 ? Speed 9. DS-3 ? I0. Wireless ? 11. Other: ? 1 respondent indicated that Internet access is through their corporate WAN Do you require service level guarantees from your provider? Yes 11 No 29 20% of respondents indicated that they require service level guarantees from their provider. 54% of respondents indicated. they do not require service level guarantees from their provider. What are the uses for your external data communications? (Check ALL that apply) Current Future 21 6 Sharing data with other company locations. Avg. file size MB 2-10 MB, 1 MB, 10 MB 15 9 Sharing data with vendors. Avg. file size MB 3 @ 1 MB, 2 @ 10 MB 14 6 Access to computer applications/storage in other corporate locations. 6 7 Access to computer applications/storage managed by an Applications Service Provider. 1 7 Creation of Virtual Private Network(s). 7 1 IP telephony. 12 9 E-commerce. 8 7 EDI. 2 7 Desktop video conferencing. 15 8 Corporate research on the Internet. 0 1 Other: Are your current data service requirements being met? Yes 35 No 8 65% of respondents indicated their data service requirements were being met, while 15% indicated their data service requirements were not being met. -9- G:\AFlad\Econdev projects\High Tech subcommittee\responses on survey.doc r If "No", please explain: • WE only have access to 56 K dial-up. DSL has just become available @ reasonable price. We only have 3-5 people with internet needs. T-3, T-1 etc are too expensive. Cable would fit us nicely. • Frontier currently provides our DSL in Lakeville. Terribly inadequate. Poor service, poor reliability, poor support, expensive, unresponsive. • Would like a cheaper way of installing a LAN between my home and the corporate office. Right now, I use PC anywhere and need to update both computers if there is a problem or upgrade. • Would like the option of cable vs. DSL or dial-up for our internet access. • We need a dedicated T-1 .line for the internet. Have been working with Frontier on this, and are expecting to be on a T-1 line by the end of June. • Although we did sign with Integra for DSL because they were 1st to offer in our area what we needed. • The service on the internet could/should be faster. • We need greater bandwidth across the WAN for student & staff file transfer, ASP needs, streaming video, and so on. • We are locked into a contract that uses mainframe and dummy terminals. We will replace these with a LAN system when economically feasible. • Would like to have video conferencing with China but cannot get it. Connection to China slow. • Frontier areas get quicker service than our Quest areas do! • Increase speed between sites. • Customers want file downloads & remote printout of drawings. - io- G:\AFlad\Econdev projects\High Tech subcommittee\responses on survey.doc Item MEMORANDUM TO: Economic Development Commission FROM: Arlyn trussing, Community and Economic Development Director DATE: August 21, 2001 RE: Dakota County Economic Development Partnership and Metro East The City Council reviewed the City of Lakeville memberships in the Dakota County Economic Development Partnership and Metro East Development Partnership at a work session on July 16, 2001 (August 6, 2001 memo attached). The City Council `concurred with comments received from EDC members (July 13, 2001 memo attached) regarding local benefit. The City Council, on August 6, 2001, approved and adopted Resolution No. 01 -124 ending the membership with the Metro East Development Partnership effective 12- 31 -01. Subsequent to the City Council action Mayor Johnson sent a letter to Metro East advising them of the decision. Copies of the Resolution and letter are attached. No EDC action is required. MEMORANDUM TO: MAYOR, CITY COUNCIL ND CITY ADMINISTRATOR FROM: JOHN HENNEN ASSISTANT TO Y ADMINISTRATOR DATE:. AUGUST 1, 2001 SUBJECT: AUGUST 6, 2001 CITY COUNCIL MEETING AGENDA ITEM Resolutions Ending Membership with Municipal Legislative Commission (MLC) and Metro East Development Partnership On July 16, 2001, the City Council reviewed the 2002 membership and dues for the following organizations: ? League of Minnesota Cities (LMC) ? Municipal Legislative Commission (ML.C) ? Association of Metropolitan Municipalities (AMM) ? Metro East Development Partnership ? Dakota County Economic Development Partnership (DCEDP) At that meeting, City staff provided information regarding the above-mentioned membership and dues for 2002 as a result of the recent legislative actions which dramatically modified the distribution formula of Local Government Aid (LGA)/Homestead and Agricultural Credit Aid (RAGA) for metropolitan growth cities. In addition, the re-establishment of levy limits and development/permit fees and regulatory reform call. into question the effectiveness of our legislative representatives. At the meeting, staff and the Ciry Council also evaluated the effectiveness of the organizations the City is associated with regarding economic development. Economic Development Commission (EDC) members were requested. to comment on the Metro East Development Partnership and members responding indicated limited value in maintaining the membership. EDC members believe that the Metro East's major focus is on St. Paul and the eastern metro suburbs. The EDC members commenting on the partnership with the Dakota County Economic Development Partnership (DCEDP) indicated theybelieve this partnership has more value to the City compared to Metro East because the DCEDP focuses on Dakota County communities. s The information provided was intended to assist the City Council in determining whether. it would be appropriate to continue membership in or withdraw from the above- mentioned organizations. As a result of the meeting, Council directed staff to take the appropriate steps to end the membership with the Municipal Legislative Commission (NII.,C) (2002 dues: $10,782.00) and the Metro East Development Partnership (2002 dues: $1,964.41) as of December 31, 2001. MLC bylaws require that a resolution be submitted by the City, stating its. decision to withdraw from the commission. Attached are two resolutions ending the membership with these two agencies. JH/jrh MEMORANDUM TO: Bob Erickson, City Administrator FROM: Arlyn Grussing, Community and Economic Development Director DATE: July 13, 2001 RE: EDC comments on Metro East and DCEDP For your information the following comments have been received from EDC members. Barry Pogatchnik (verbally)- Thought the cost of membership is a factor-if $200 stay amember-if $2,000 drop membership. Jim. Emond (verbally)- Does not think much of Metro East as they have not produced for Lakeville-DCEDP makes more sense because it is more local Bob Brantly (written)- Drop out of Metro East (but continue to follow it) and stay in Dakota County Economic Development, making our input count for both us and the county as much as possible. Jack Matasosky (e-mail)- What is our R.O.I.? I believe it is zero. They do not have our interest at heart, they are motivated to help those areas that hold their interest...... St. Paul area cities. Even having Duane Zahn as a key board member did not reap rewards. I think, as in the past, a minimal membership is the most we should commit to.....we need to market our community ourselves, we will, and have much better successes. 1~ CITY OF LAKEVILLE RESOLUTION DATE: august 6, 2001 RESOLUTIONNO.: of-124 MOTION BY Mulvihill SECONDED BY: Bellows Resolution Ending Membership with Metro East Development Partnership WHEREAS, the City Council, Economic Development Commission and staff evaluated the. effectiveness of organizations the City is a member with regarding economic development; and WHEREAS, Economic Development Commission members believe the major focus of the Metro East Development Partnership is on St. Paul and the eastern metro suburbs and see limited value in maintaining the membership with the Metro East Development Partnership; and WHEREAS, Economic Development Commission members indicated that the partnership with the Dakota County Economic Development Partnership has more value to the City compared to Metro East Development Partnership. NOW, THEREFORE, BE IT RESOLVED that the City Council hereby ends the membership with the Metro East Development Partnership as of December 31, 2001. APPROVED AND ADOPTED by the City Council of the City of Lakeville this 6h day of August, 2001. CI7YOF LAKE VILLE / Robert D. Jo on, Mayor A TTEST.• 1 ~ Charlene Friedges, City, ~ rk A August 9, 2001 _ David Piggott Metro East Development Partnership 332 Minnesota Street, Suite N-205 Saint Paul, MN 55101 Dear Mr. Piggott:. The Lakeville City Council and the Economic Development Commission (EDC) recently evaluated the effectiveness of economic development organizations of which the City is a member. Economic Development Commission members believe the major focus of the Metro East Development Partnership is on St. Paul and the eastern metro suburbs and see a limited value in maintaining the membership with Metro East Development Partnership. On August 6, 2001, the Lakeville City Council approved and adopted the attached resolution ending membership with the Metro East Development Partnership as of December 31, 2001. The Council wishes you and the organization continued success in your future endeavors. Sincerely, ~ ~ - ~ v ~ y ~ Robert D. Johnson Mayor cc: City Council Economic Development Commission Members Ken Stabler, Co-Chair, Metro East Development Partnership Susan Vanovetz, Co-Chair, Metro East Development Partnership Robert Erickson, City Administrator Arlyn Grussing, Community and Economic Development Director Ann Flad, Economic Development Coordinator ~~i~v c~.~:~~ ~~ll~ i;tt. f~ t .....'1 t~~~ 1.`(+-ia' ~l)?) ~i11{)-~j:jl)I1 •f'r4~ yc~l-~~~I~~ Ite1~, TO: EGO~tQMIC DEVELOPMENT COMMISSIONERS CC: RCI~ERT ERlGKSON, CITY ADMINISTRATOR ARLYN GRUBBING, COMMUNITY & ECONOMIC DEVELOPME~fT DIRECTOR FR: AP~IV FLAD, ECONOMIC DEVELOPMENT COORDINATOF DATE: .AUGUST 22, 2001 RE: Manufacturer's Week 2flfl1 Tentative Activities Manufacturer's Week 2001 is only eight weeks away! Staff has met with Todd Bornha~user ~ CF~atnber of Commerce regarding this year's activities. Those activities prc~ptd fc~r 2001 are similar to those undertaken in 2~0. Please review the activities and pr~v your input and suggestions to staff. luncheon: The Chamber of Commerce intends to hold a "Recognition -~.uncheon" for manufacturers. The City has been asked to participate. Location and details are being determined. StafF suggested identifying a speaker that is relevant to manufacturers. Last year, manufacturers were invited to the Legislative Forum. and Manufac#urer's Recognition Luncheon, with nine mane#ac#urers atte'n£1ing. In the past, the City has held luncheons or dinners. A 199? survey of businesses indicated they would prefer a dinner and speaker, however Manufacturer's Week in 2flfl1 falls on the sarrre week as the Chamber's Fail Fundraiser, and two dinners in one week are not feasible. Proclamation and Odvernor's Certificate: The Mayor will be asked to proclaim the week as Manufacturing Week. All manufacturing (industrial) businesses wilt receive a copy of the proclamation along with a Certificate of Appreciation from the Governor. These will be mailed to businesses to ensure their timely distribution. The Proclamation will also be published on the Messages page of the This Week-Life & Times newspaper.. informational Articles: The Chamber is approaching the Lakeville This Week-Life & Times about doing an edition that focuses on manufacturing businesses. !f the newspaper doesn't respond to this request, staff will draft articles that highlight the benefits of Indus#rial businesses to our community. This is consistent with tfie 2002-2004 Strategic Pian for Economic Development. Item I~®. MEMORANDUM TO: ECONOMIC .DEVELOPMENT COMMISSIONERS CC: ARLYN GRUBBING, COMMUNITY & ECONOMIC DEVELOPMENT DIRECTOR -.ANN FLAD, ECONOMIC DEVELOPMENT COORDINATOR FR: ROBERT ERICKSON, CITY ADMINISTRATOR DATE: AUGUST 22, 2001 RE: .Revolving Loan Fund Financing of Marquette Bank's Acquisition of the Car Wash/Laundromat In Downtown Lakeville To Be Redeveloped As A Parking Lot... Marquette Bank is proposing to purchase the car wash/laundromat and redevelop the. property into a parking lot. In order to achieve the public benefits of "stabilization of business districts," and "redevelopment, specifically the elimination of slums and blights," Marquette Bank is requesting financial assistbnce from the City in the form of a forgivable loan to be used to purchase the property and redevelop it into a parking lot. Marquette Bank has need for additional parking and is currently using Babe's parking lot for overflow. The additional parking will assist Marquette in attracting viable businesses to lease space at their downtown location. The Downtown Lakeville Business Association had also previously inquired about the feasibility of turning that property into a parking lot. The property is blighted and is not suitable for renovation to Historic Fairfield District of Downtown Lakeville Design Guidelines. Marquette Bank would not find this project financially feasible without the requested assistance to the City. The property has leans against it in the amount of $475,520 (Dakota County District Court Judgement for $475,520.00 including the loan principal, ..interest, and .accumulated #ees.) However, the Dakota County Assessor has the two taxable parcels (land only - 12,300 square feet) valued at $56,300.00 and improvements thereon valued at $156,400.00. The total assessed valuation for the parcels (buildings and improvements) is therefore $202,700.00. The buildings are considered to have little value due to functional obsolescence and lack of repairs and maintenance. Sales of parcels in the area have indicated a value range of between $8.00 and $10.00 per square foot. It is also estimated to cost approximately $20,000.00 to raze improvements on the subject property and dispose of the rubble. At the April 30, 2001 City Council Work Session, the Council indicated their support for exploring the feasibility of acquiring the property to be redeveloped for additional parking. The City of Lakeville suggested a purchase price of $105,000.00 based upon the above conditions, $10.00 per square foot, and $20,000.00 in removal costs. Subsequent negotiations with CIT have resulted in a tentatively agreed upon price of $125,000.00. It is proposed that the City obtain deeds from CIT and Diadong. Marquette Bank would then acquire the property and conduct the redevelopment for use as a parking lot. The City of Lakeville has incurred costs associated with this property, including attorneys fees and hazardous waste clean-up. The Lakeville Revolving Loan Fund (originating with New Morning Windows) has a balance of $96,587. After the City's costs are deducted, it is estimated that approximately $90,000 will be available to provide to Marquette Bank as a forgivable loan. Terms of the loan are subject to Department of Trade and Economic Development guidelines, the state statute on Business Subsidies, and the City's Business Subsidy Policy. Specific items that must be incorporated into a loan agreement are included in a memo from Ann Flad dated August 10, 2001. See attached memo and supporting documentation. It is proposed that the City be reimbursed for costs associated with the City's involvement in this property, and the remainder of the funds (approximately $90,000) be used to provide Marquette Bank a forgivable loan to squire the property and redevelop it into a parking lot. The Revolving Loan Fund is seeded when New Morning Windows repays its loan to th4 City (originating from a DTED/Minnesota In~,restment Fund grant.) Assuming New Morning Windows continues to repay their loan on schedule (with no default or prepayment), the fund should be replenished with approximate balances shown below: $13,500 as of December 31, 2001 $32,000 as of December 31, 2002 $46,700 as of December 31, 2003 $61,700 as of December 31, 2004 $68,797 as of December 31, 2005 $72,644 as of December 31, 2006 • James R. Walston Direct Dial: (612) 340-7949 e-mail: jrwalston@riderlaw.com Apri12, 2001 Mr. William J. Fisher Gray, Plant, Mooty, Mooty & Bennett, P.A. 3400 Multi Foods Tower 33 South Sixth Street Minneapolis, MN 55402 Re: CIT Small Business Lending Corporation vs. Daidong, Inca and Young Park Court File No. C3-00-9191 Our File No. 15275/151 Dear Mr. Fisher: This office is legal counsel to the City of Lakeville. As expressed to you on the phone a few times over the last month or so, the City of Lakeville has indicated an interest in acquiring the property subject to the above-referenced foreclosure action. We have conducted a preliminary market analysis of the property and submit an offer to you on the basis of what be believe the fair market value of the property to be in its "as is" condition. The Dakota County Assessor has the two taxable parcels (land only - 12,300 square feet) valued at $56,300.00 and improvements thereon valued at $156,400.00. The total assessed valuation for the parcels (buildings and improvements) is $202,700.00. We believe the buildings to be of little value due to functional obsolescence and lack of repairs and maintenance. Sales of parcels in the area have indicated a value range of between $8.00 and $10.00 per square foot. In addition, we believe it would cost approximately $20,000.00 to raze improvements on the subject property and dispose of the rubble. As such, the City of Lakeville is willing to pay $105,000.00 for the property, based upon $10.00 per square foot and $20,000.00 in removal costs. The transfer of the land to the City of Lakeville could occur a number of ways: r Mr. Robert A. Erickson August 23, 2001 Page 2 First of all, the City could obtain deeds from CIT and Daidong. It would be anticipated that Daidong and Young Park may pay additional consideration to CIT (to satisfy guaranty obligations) in addition to relinquishing its interest in the property. Secondly, the City could obtain some or all of the rights of CIT in and to the December 5, 2000 judgment and the City could proceed to foreclose out Daidong's interest. Finally, the City could bid in at the sale wherein the price would be close to the amount previously stated. Since the City has no interest in pursuing Daidong, Inc. or Young Park, it would be the City's preference to obtain deeds from all interested parties with the understanding that anything above and beyond the $105,000.00 would be CIT's funds to keep. In other words, anything paid by Daidong and Park towards settlement could be turned over to CIT. As discussed, you will pass this offer onto your client's representative and thereafter advise on .how CIT intends to proceed with this matter. I shall await your response. Sincerely, RIDER, BENNETT, EGAN & ARUNDEL, LLP By: James R. Walston JRW:rIt cc: Robert A. Erickson, Lakeville City Administrator C:\TEMP\#2N701 !.doc City Council Work Session Minutes Apri130, 2001 Page -5- ouncil Members directed staff to invite Barbara Arney to attend a City Council ting to give a short presentation regarding the rewards and. benefits of the City Co it retreat. Sb. Reva of Revised Mission Statement: Dr. Bill Morr of Decision Resources had reviewed the proposed change to the City of Lakeville's Mis Statement and had offered the suggestion that the word "visionary" be replaced with ovative" . The word "possible" was also removed. It was also suggested that a catc "tag-line" would add .further appeal. Council directed staff to mpile some potential taglines for. their consideration. ITEM NO. 6. REVIEW PROJECT SSUES LIST. • John Hennen will be receiving a 'tional census information over the next two years. • The long and snowy winter created a $7 0 shortfall in the snow removal budget, which will be offset utilizing the contingent nd. • City Administrator Erickson indicated staff w d like to ask residents on the next survey if they would support legislation prohibit the use of phosphorus in lawn fertilizers. Mayor Johnson felt that citizens would st need to be informed on all aspects of the issue. Council Member Bellows fe that the question could be preceded with an informational statement. • City Administrator Erickson asked Council Members if th would be willing to assist with the Buy-a-Chair campaign by contacting asso ' tes for donations. Council Members would need a list of who has already donate Mayor Johnson suggested that several of the civic organizations. could also bet a involved by contacting their own members. • The Community Development Agency (CDA) has announced that eir next Affordable Housing project will be on the Gilb parcel at 203`d St. and Iberia ve. • The City Attorney is working on an amendment to the Sexually Oriented Bu ess Ordinance. A summary of the ordinance amendment could.. be published due to sensitive nature of the material. • Negotiations continue for the acquisition of the property that was the former site of the dry cleaners/car wash in downtown Lakeville. The site could be cleared and used for additional parking. MEMORANDUM TO: Robert Erickson, City Administrator Arlyn trussing, Community & Economic Development Director Dennis Feller, Finance Director Jim Walston, Attorney, Rider, Bennett & Egan Greg Peterka, Marquette Bank FR: Ann Flad, Economic Development Coordinator DATE: August 10, 2001 RE: Forgivable Loan Requirements For Marquette Bank Per DTED Nancy Johnson of DTED provided additional information on the structuring of a forgivable loan from our Revolving Loan Fund for Marquette Bank to purchase the car wash/laundromat property downtown. A sample of a Special Conditions document that DTED used with other projects is attached for your reference. Below is a summary of the information from the previous .memo on this subject dated July 30, 2001, with the addition of information on the Special Conditions suggested by DIED and examples of language that could be used in a loan agreement. The Loan Agreement will be in recordable form. Ms. Johnson stated that a forgivable loan is structured much like a traditional loan. The entire Special Conditions document provides language and information that may be incorporated into loan agreement, however the .content of items 4, 8, 9, and 10 must be referenced. The state statute on Business Subsidies indicates that any grants made must be structured as forgivable loans (116J.994 Subd. 3 (b).) Both the City's Business Subsidy Policy and the provisions in the state statute on Business Subsidies will apply to the Marquette Bank forgivable loan. The following Business Subsidy Criteria should be included in the loan agreement: • A description of the subsidy, including the amount and type of subsidy. As of August 30, 2001, the Economic Development Revolving Loan Fund had a $96,587 balance, however the city will incur costs for attorney fees, hazardous waste clean-up and other related project costs. The amount of the forgivable loan that will be made to Marquette Bank will be adjusted once these costs are known. Example of lanquage for the loan agreement: "The City of Lakeville will provide approximately $90, 000 from the City's Revolving Loan Fund/MIF proceeds, as a forgivable loan to Marquette Bank, 8790 207th Street W. for the acquisition of the Car Wash/Laundromat building at 20725 Holyoke Avenue." • A statement of the public purpose for the subsidy; According to the City's Business Subsidy Policy, "Worthwhile projects may provide value to the community in the forms of infrastructure improvements, stabilization of business districts or neighborhoods, or enhancement of economic diversity" (see attached policy.) Nancy Johnson also indicated in previous conversations that "redevelopment, specifically the elimination of slums and blight" would need to be incorporated into the public purpose statement in order to use the funds in the manner proposed with Marquette Bank. (The City is also required to report this public purpose during the annual report to DTED on the business subsidies provided by the City.) Example of lanquage for the loan agreement: "The forgivable loan is being made to Marquette Bank for the purpose of stabilizing the downtown business district. Funds will be used by Marquette Bank to acquire the property at 20725 Holyoke Avenue and redevelop it as a parking lot, thereby eliminating slums and blight in the Historic Downtown District and providing a benefit to the public. " • Measurable, specific, and tangible goals for the subsidy, including job creation goals (State Statute 116J.994 Subd. 4) Example of lanquage for the loan agreement: Marquette Bank must accomplish the following goals in order to satisfy the terms of this forgivable loan and avoid repayment: 1.) The property at 20725 Holyoke Avenue must be acquired, demolished (not from the proceeds of the Lakeville Revolving Loan Fund) and redeveloped as a parking lot within one year of the loan date. 2.) Three FTE jobs must be created at a wage level at or above $9.50/hr. within two years of the loan date. 3.) Marquette must remain in operation at their location downtown for five years after the loan date (this is required by the state statute on Business Subsidies -see aftached statute, and Special Conditions clause 10.) t • A description of the financial obligation of the recipient if the goals are not met (State Statute 116J.994 Subd. 6, and item 4 of Special Conditions.) This is where we indicate' that the loan is forgiven if all goals are met within their designated timefi-ames (3 jobs created within 3 years, a parking lot developed within 1 year, Marquette remaining in operation at their downtown location for 5 years.) Item numberfour (4) of the attached Special Conditions .document provides language that can be reworded to apply to thisproject. Example of language for the loan agreement: The City of Lakeville shall provide approximately to Marquette Bank to be used for the. purposes, conditions, and terms. as stated elsewhere in this document, and may not be modified without prior written approval from the City. The term of the loan will be sixty (60) months and the interest rate will be (implicit price deflator or more, per statute) far the term of the loan.. lf, at the end of a two year period beginning September xx, 2001 and ending on September xx, 2003, three (3) Full Time Equivalent (FTE) jobs have not been created by Marquette Bank or its tenants in downtown Lakeville, the company will repay to the. City a pro rata portion of the principal of the loan in the amount of $30, 000 for each job not created, plus interest on such pro rata portion of principal at the simple rate of (whatever the interest rate is) per annum from September xx, 2001 to the date of the payment. The remainder of the loan will be forgiven. If the property is not redeveloped into a parking lot by July 1, 2002, the company will be required to repay the entire principal of the loan and interest at the simple rate of (implicit. price deflator or more) per annum from September xx 2001 to the date of payment. If the company does not remain at its present location at 8790 207th Street W., Lakeville, for five years from September xx, 2001, the company will be required to repay the entire. principal of the loan and interest at the simple rate of (implicit price deflator or more) per annum from September xx 2001 to the date of payment. (The City may also choose to forgive half of the loan 2.5 years after- the funds are disbursed if Marquette has met all goals except the one requiring them to remain in operation at the site.) • A statement of why the subsidy is needed; Example of language for the loan agreement: "The building on the property is in substandard condition. The substantial investment that would be required in order for the building to meet the .Historic Fainreld District of Downtown. Lakeville. Design Guidelines makes the renovation of said building not feasible. Additionally, the building has been abandoned since August 2000, and the owner has defaulted on the mortgage for said property. The owner has not demonstrated any intent to occupy the building for any purpose consistent with the uses allowed in the C-CBD zoning district. The funds are required by Marquette Bank in order to make the project of redeveloping the blighted property at 20725 Holyoke Avenue financially feasible. Without financial assistance from the City of Lakeville, the project would be a financial liability to Marquette Bank and would not be undertaken by the company." • A commitment to continue operations in .the jurisdiction where the subsidy is used for at least five years after the benefit date. (State Statute 116J.994 Subd. 3 (6), and Special Conditions number 10 of the attached document.) • The name and address of the parent corporation of the recipient, if any. • A list of all financial assistance by all grantors for the project. • Reporting requirements by Marquette Bank to the City of Lakeville (State Statute 116J.994 Subd. 7., and Special Conditions document clause 8) State statute requires that a recipient "must provide information regarding goals and results for two years after the benefit date or until the goals are met, whichever is later." The statute defines the items of information Marquette will be required to provide to the City of Lakeville (see statute attached.) The statute also indicates that if a recipient does not submit its report, and after required notification, the recipient must pay to the grantor a penalty of $100 for each subsequent day until the report is filed. The maximum penalty shall not exceed $1,000." (State Statute 116J.994 Subd. 7 (d).) The City of Lakeville will also be required to report on this forgivable loan to DTED on an annual basis. w SPECIAL REVENUE FUND - 02270 ECONOMIC DEVELOPMENT REVOLVING LOAN 2001 2002 2003 2004 2005 2006 ESTIMATEESTIMATEESTIMATEESTIMATEESTIMATEESTIMATE Revenues Principal on ERF loan 18,126 15,571 11,234 11,927 12,663 1,090 Interest on ERF loan 3,744 2,662 1,909 1,216 481 5 Interest on Investments 3,382 542 1,293 1,871 2,471 2,752 Grant - - - - - - Total Revenues 25,252 18,775 14,436 15,014 15,615 3,847 Expenditures Other 96,258 - - - - - State of Minnesota (repayment) - - - - 8,594 - Total Expenditures 96,258 - - - 8,594 - Net Increase/(Decrease) (71,006) 18,775 14,436 15,014 7,021 3,847 Fund Balance, January 1 84,557 13,552 32,327 46,763 61,776 68,797 Fund Balance, December 31 13,552 32,327 46,763 61,776 68,797 72,644 ERF (Economic Recovery Fund) Final payment due Jan 1, 2006. Item MEMORANDUM TO: Economic Development Commission FROM: Arlyn trussing, Community and Economic Development Director DATE: August 22, 2001 RE: TimberCrest Status TimberCrest at Lakeville development review process is proceeding with the grading of the property to occur later in 2001. The following timeline is proceeding on schedule. • Comprehensive Plan Amendment completed with receipt of attached July 30, 2001 letter to Robert Erickson from Ted iviondale of the Metropolitan Council. • Environmental Assessment Worksheet compieted with .the City Council making a negative declaration and not requiring an Environmental Impact Statement at their meeting of July 30, 2001. (Resolution Attached). • Environmental Affairs Committee recommended approval of the development plan on August 21, 2001. • Public Hearing scheduled for the Planning Commission on August 23, 2001. The request includes rezoning of the property and a preliminary and final plat for the first phase, which includes the Super Target. • Will be reviewed by the Park and Recreation Committee at their. September 5, 2001 meeting. _ _ • Will be scheduled for first available City Council Meeting following the recommendation from the Planing Commission and preparation of development contract Metropolitan Council ~ ~ Improve regional competitiveness in a global economy July 30, 2001 Robert A. Erickson, City Administrator City of Lakeville 20195 Holyoke Avenue Lakeville, MN 55044 Re: Comprehensive Plan Amendment, TimberCrest at Lakeville Metropolitan Council Referral File No. 16958-4 Metropolitan .Council District 4 Dear Mr. Erickson: At its meeting of July 25, 2001, the Metropolitan Council completed its review of the Lakeville Comprehensive Plan Amendment. The amendment changes the land use plan designation, from Office Park/Business Campus to Commercial, for 96 acres of land located in the northeast quadrant of the I-35 / CSAH 60 interchange. The Council found that the plan amendment is in conformity with metropolitan systems plans, consistent with the Regional Blueprint, and has no impact on the plans of other units of local government. The efforts of the city and developer to manage, treat and infiltrate stormwater and protect Lake Marion's water quality are commendable. The city of Lakeville may place the plan amendment into effect. A copy of the full report is attached. ~n r ,t' .~r'~ '1 (r1.; ed Mon ale Chair Attachment Cc: Julius C. Smith, Metropolitan Council District 4 Michael King, Metropolitan Council Principal Reviewer /Sector Representative Linda Milashius, Metropolitan Council Referrals Coordinator www.metrocouncil.org Metro Info Line 602-1888 230 East Fifth Street • St. Paul, Minnesota 55101-1626 (651) 602-1000 Fax 602-1550 1'IY 291-0904 An Equal Opportunity Employer y A S O 1.~ Executive Summary Oth@r bUS~t1@$$ Agenda Item: 2001-300 Meetin date:: Jul 25, 2001 ~ • Date: July 18, 2000 Subject: Lakeville Plan Amendment Referral File No. 16958-4 District(s), Member(s): Metropolitan Council District 4 (Julius Smith 952-831-1788) Policy/Legal Reference: Minn. Stat. § 473.864, Subd. 2 and § 473.175, Subd. 1 Staff Prepared/Presented: Michael R. King, AICP, Principal Reviewer (651-602-1438); Eli Cooper, Director, Planning and Growth Management Department (651-602-1521); Caren Dewar, Director, Community Development Division (651-602-1306) Division/Department: Community Development/Planning and Growth Management Proposcd Action/RZotion That the Metropolitan Council adopt the following recommendation: • That the Lakeville Comprehensive Plan Amendment is in conformity with metropolitan system plans, consistent with the Regional Blueprint and has no impact on the plans. of adjacent units of local government. The city of Lakeville can. put its plan amendment into effect. Overview The city of Lakeville proposes to amend the city's comprehensive plan to change the land use designation of 96 acres of land located in the northeast quadrant of the I-35 and CSAH 60 (185` Street) from "Office Park/Business Campus to Commercial. (Attachments 1 and 2). Both land use designations are classified as commercial. Development of 567,000 square feet of retail, service, office, and restaurant uses are being proposed by Avalon Real Estate Group for the site (Attachment 3). The project will be anchored by a SuperTarget store including an Archer Farms Market Grocery. Approximately 53 acres of the site will be covered by impervious surfaces, 30 acres of open space, and 13 acres left natural or landscaped. Council review of the comprehensive plan amendment is based upon the impact of the CPA on Metropolitan System Plans for aviation, recreation, transportation and water resource management. The proposed CPA is in conformity with regional systems. ~~'ater Resources Management (James Larsen 651-602-1078) The 96-acre amendment site is currently undeveloped and contains over eleven acres of wetland. All stormwater runoff generated by the proposed project will be directed off site to either Lake Marion, or Orchard Lake. The lakes are both designated as "Priority Lakes" in the Council's Water Resources Management Policy Plan (WRM), because of their multi-recreational regional uses. Both lakes are also tributary to the Vermillion River. The comprehensive plan amendment proposal would change the site's land use designation from Office Park /Business Campus to Commercial. Commercial development of the site as proposed will result in conversion of 60 to 65 % of the site to impervious surface. The city's 1995 stormwater management plan assumed the site would be developed in single/multiple family housing with significantly less impervious surface. During staffs' review of this amendment, the city was requested to provide additional information concerning the estimated quality and .quantity of stormwater runoff that would be directed off-site into Lakes Marion and Orchard, and ultimately the Vermillion River. The issue was whether or not the proposed land use change A- might result in the degradation of regionally significant waters. Revisions have been incorporated into the proposed project that will improve the quality and reduce the volume of stormwater that will leave the site following development to less than existing conditions. Infiltration basins will be constructed on-site which will receive pretreated stormwater runoff. Infiltration basin overflow will be directed to either onsite or offsite wetlands. The city of Lakeville will assume maintenance responsibilities for all. catch basins, mechanical pretreatment devices, and infiltration basins following. their construction, to insure that design pollutant removal efficiencies continue to be achieved and that the basins continue to infiltrate. The city of Lakeville's surface water management plan policies and requirements are consistent with the Council's WRM policy plan policies and guidelines. Staff has determined that stormwater management facilities proposed to be constructed for this development will be adequately designed to prevent negative impacts to Lake Marion, Orchard Lake, or the Vermillion River. A significant portion of the site's impervious surface is to accommodate parking requirements. Council staff , recommends that the city and project proposer continue to work together to further improve the quality and reduce the volume of site runoff through incorporation of rain gardens, infiltration basins, and other `low impact development techniques' into the many parking areas proposed for construction on the site. Transportation (Ann Braden 651-602-1705) Major roadway construction and reconstruction of the CSAH 60lI-35 interchange are planned for the area serving the TimberCrest Development and to accommodate significant traffic increases due to connection of CSAH 60 to the recently constructed Scott County Highway 21 west of I-35. These road projects are phased such that the traffic generated by the TimberCrest Development can be accommodated on the local and regional road systems. The estimated Average Daily Traffic (ADT) generated by TimberCrest is 25,000. The peak hour will generate 3,526 (two-way) trips on a Saturday afternoon. It is estimated that Lakeville residents will make 65 percent of those trips. Currently, 95 percent of those shopping trips made by Lakeville residents are to destinations outside the city. Most of those trips that will now be attracted to the TimberCrest site will have shorter lengths and be less likely to use the regional highway system. In order to accommodate this development and other growth in Lakeville, the city and Dakota County have been planning roadway improvement projects at and near the interchange of I-35 and CSAH 60 for several years. The first phase of improvements (see attachment 4), is scheduled for completion in November 2002 and consists of constructing new south ramps at the interchange with I-35, adding turn lanes to CSAH 60 at the ramp intersections, constructing relocated northeast and southeast frontage roads (Kenrick Avenue), revising the existing signals at Knollwood, the west ramp of I-35 and the east ramp of I-35, installing signals at the intersection of relocated Kenrick and CSAH 60 and reconstructing CSAH 60 between I-35 and CSAH 50 to add medians, turn lanes and shoulders. The new south ramps will convert the existing "half diamond" interchange into a full movement interchange, which is appropriate for the junction of a principal arterial and a minor arterial roadway. The reconstruction of CSAH 60 east of I-35 provides better access management and improves traffic operations and safety. The second phase of improvements (see attachment 5), which are planned to be under construction starting in 2004 and completed the following year, will widen CSAH 60 west of I-35 from atwo-lane rural highway to a four-lane divided. roadway and includes additional modifications and improvements to the CSAH 60 interchange. The traffic study contained in the EAW also identifies potential interim improvements that will provide improved levels of service at all turning movements, and flexibility for managing traffic during permanent construction of the I-35 bridges and widening of CSAH 60. These improvements will also provide reserve capacity in the event that the completion of the permanent interchange improvements is delayed or if traffic volumes increase more rapidly than forecasted. C( Infrastructure: Public water and sewer are available. B Quality of life:. The new facilities and services will contribute to the quality of life enjoyed by residents. H Communication constituency building: The amendment reflects the shared local/regional decision making process. H Ali nment. The lan amendment is consistent with Council lans. ATTACHMENTS Attachment 1: Lakeville Area Map Attachment 2: Project Site and Vicinity Aerial Photo Attachment 3: Project Site Flan Attachment 4: Phase I Roadway Improvements Attachment 5: Phase II Roadway Improvements V:\LIBRARY\ComDevRp\2001 reports\Lakevitle SuperTarget Plan Amend. 07.03.01 16958-4 .doc Attachment 1 Laikeville Area Mnp v r - age Burnsville _ Apple Valley _ . 162ND_ST W _ - _ _ _ ~ a . _ _ _ L ~ _ _ _ _ - . r..y, . ~ . _ - - , Orchard 2 ~ _ - - - _ . , _ _ Loke - - r _ _ _ Note: Scott Co. Rd. 21 now - ~ 0 ~ - - - oonnects across Credit River `?"Z _ - _ _ Twp. to Prior Lake, Savage. oPf'',BJe~`t ~oQ - - J~ and Shakopee ~te` s° v~ 185TH ST E - - ' 'i c°° CO R)/D 21 - 185TH 5 - W I ~ r ~ ~ ' .i Lake~il~e i_ L ~ ~ _ ~i 1 lake ~ ~ ~F - ~ ~ 1 ~ Marion ~ ~ ~ THSTW IY ti ~ 210TH ST W dh% ~ ~ L! 215TH ST W `Y~, , 2 J ' / I ~ J ~ Eureka Twp. _ M A 0 j 0 1 2 3 Miles H A FE IN RAMSEY d a oi~ 7 0 a ~ Attachment c Project Site and Vicinity y- . w ~ y' 7 r t a 1 '1 ¢4~l _ ~ x r i._. ~ ~ ' ~ dw .3,~%~}~~ ` _ , rw r. r.1`i ~ ~ '~I rod!, t'~, t y, «r~ Y.a , - - ~ a ~ y ~ . . t r . , K 3 r iX:_ ,a ~ ~ ~ 4i,a:.r e ~ ~ i f~' i ! ~ ~ ` , ~ R. _ ~ r+ r ~ ~ M S ~ ~ ~ ~ ,I e~ 7 , i ' * t _ j' t + , ! • t ~ . ~II 1/R 1 K •q, l N 0 0.25 0.5 0.75 1 Miles A Attachment 3 t Proposed Site Layout GOPNER ei17E OIIE [L1 fr•sno nom fr ar. urM, ate, Orw~wewi~we 1i%~" wAMA ~W i~Ytw 1~ raw ~~a.~ •~,1 u~w.W~N•mRwt r ~ = ~ ,w, ~w ,A,1 YLLCM,w wrr~ _ , i `,,i,, !1' \ ~ ~ i I~, iwA Iw•, ti ...W..rr.wr. ~n w., J / i~`` ~ f~TT,KAI pAN(WAY / ACCCff Nft[ / nAWON'N STALL OCTAA,~ it ~ n,ti i~~;. y frr[ s 1~ ~ i~ yI' 1 ~+aaxcnoW *AN.¢ cwr.a~~ i~•. .;fir ~`,~I`„,~ 1\'~ - '.~'i...•r..~ wv fr. w.r~ (I -~V' ~ 1\1; , i w rr'~ ~ stir: w~i~ nom w'vic fw~W~f I~.•. \a_ '+w:S :.:ice . II - ti - 11}1r ,`~i; \I ~_,r. r.. w.rWrwn., ff~mNO WW~f \ 1 I I Awt 1 ` ` • ~ ~ 7RC WTA / iii W,IWN fuu slrW rw a t` .1 / / rj _ \ W war _ - ~ r - ~ ~ - ~ \ ~ f~ % ~ 11'1 ~ \ I! \ ~ fl 1. ~ 1~ ~ j~ 1 1 1 'f~• 11 I T 1 l-_______~_ _ ~ H _ - ...~r.`r YA 1 Attachment 4 ' Phase 1 Roadway Improvements ~ i - - - r r'- - u ~ ; ~ - -1 A _ _ ~ i 1 ' ' - ae0 inn ~ ( i = ~ 1 t , _ ' ~ KENRtCK AVE ~ ~ i ! TIMBER dtEST ADD TURN LANES / / . ! ~ ' r ~ J 1 , REVISE SIGNAL / ~ j ~ r r,~,~ ~ y 'q 0 ? f I ~ ~IM~~-~J~"' f j- i / / ~ t ` X71 ~ 1, - ~ ~ •s ~ ~ ,f .ON CS1H 60 SIGNAL ~ • i~_;'w ~ ~ MEDfAN /lND 1 ,f{~/ /1,~.r?_~ ~ ~ r" Dc / 1 j -yA~AJ4I~~-( GAO RUMP 1 1 / - r ~ i ~ ~ TRNL ; ~14TI FRONTIhGFti ~ , j ; ~ • i I i` t% r ~ ~'-i 0 1 1 • '1 ~ _ ~ _ i ~ f?RpNA'AGE ~ A'~Afl\ ~ 1 1 1 1 ~ p ~ i y, t! T•. 1 1 J1 ~ 1 Y X X X - INQIGATES REMp ~ ~ ~ ' ~ , . \ ~`-.L-- - ~ t. _ r q i ~ , i Source: SRF Consulting Group, Inc. Attachment 5 , Phase 2 Roadway Improvements ~ ' ' CONSTRUCT AUXILiAR1' r---- CONSTRUCT AUXlUARY ' ~ ~ ~ LANE TO CSP~H So ~ " e ! UNE fROM CSr~H 50 ~ ~7_ r ~ ` 3 r _.~.i._._._. 1 ._.J ~ f ~ 1~NRICK AVE ` 1 b i . , 1 ~ _ - - _ 7~: rJ RECONSTRUCT i// ~ i ~ / •~i ~%~c~ RAMP ' ' / /i . ~ r:. CST a • RECON5TRUCT CSAH 60~ " /j i ! ; ; COLt~TOR ~ ~ ` v 1 4 LANES, TURN lM1ES, . ~ i/r ! ~ ROADWNC••-- ~ S,' • SHOULDER ANO MEOLIN) i% /.i r.% ` - - ~ `4 r, / / i ' ~ ` ~ / 'RECONSTRUCT ! SIGNAL ~ rr i"~ :~:b ~ i • ~ S1dON/1l i ~ r~- I 1 ~ fi r1 ~ ~ ij ~ ~V./ t~• ~ RELOCATE i • . _ - - ~ , it j FRONTAGE i ~ lX~i i ~ ~ ~r.~ i • ; ~iE- RR~UICE ,1-35. ~ ~ t ~ ` `Cf~~ 'c. - ~ ~ ~R10GES OVER' _ ~ ^ ~ 1 0! . CSAH } ' 'r_~ . , I X X X - WDN~17E5 REMOVED ~ ` ! ' _'._._.~i c:; _ _ i ' Source: SRF Consulting Group, Inc. August 1, 2001 TO INTERESTED PARTIES: On Monday, July 30, 2001 the Lakeville City Council approved a resolution adopting record of decision, response to comments and decision on the Environmental Assessment Worksheet (EAW) for the proposed Timbercrest at Lakeville retail development. The City Council determined that the proposed Timbercrest at Lakeville project does not have the potential for signii•icant environmental effect and therefore preparation of an Environmental Impact Statement (EIS) was not ordered. The Timbercrest at Lakeville EAW was distributed for review on June 19, 2001 and the availability notice appeared in the EQB Monitor in the June 25, 2001 issue. The official public comment period ended on Wednesday, July 25, 2001. The City of Lakeville received written comment. from seven public agencies and one private association. Please find enclosed for your reference a copy of the resolution, record of decision, written comments and response to comments adopted by the Lakeville City Council. Should you have any questions, please feel free to contact me at 952-985-4400. Sincerely, / T O LAK obert A. Erickson City Administrator RAE: rm Enclosures City of Lakeville 20195 Holyoke Avenue • Lakeville, MN 55044 Phone (952) 985-4400 • FAX (952) 985-4499 • wtivrv.lctkeville..mn.ccs 1 CITY OF LAKEVILLE DAKOTA COUNTY, MINNESOTA Date July 30, 2001 Resolution 01-111 Motion By Mulvihill Seconded By Rieb RESOLUTION ADOPTING RECORD OF DECISION, RESPONSE TO COMMENTS, AND DECISION ON THE "ENVIRONMENTAL ASSESSMENT WORKSHEET FOR THE PROPOSED TIMBERCREST PROJECT WHEREAS, the City of Lakeville, as the responsible governmental unit, has directed the preparation of an Environmental .Assessment Worksheet ("EAW") for the proposed Timbercrest project; and WHEREAS, the City has received and reviewed the EAW and has forwarded it for comment to various groups, organizations, and individuals as required by law; and WHEREAS, the Notice of Availability for Review was published in the EQB Monitor on June 25, 2001. WHEREAS, the thirty (30) day comment period has closed; and WHEREAS, the City Council has received and considered reports, letters, and comments on the. EAW. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lakeville, Minnesota: 1. The Record of Decision is adopted. 2. The Response to Comments is adopted. 3. The project as proposed does not have the potential for significant environmental effect and therefore preparation of an Environmental Impact Statement is not ordered. 95190.01 1 RNK:07/27/2001 s PASSED AND DULY ADOPTED by the City Council of the City of Lakeville, Minnesota this 30`h day of July, 2001. CITY OF LAKEVILLE - ~ / p~ t%'"' ''f Robert D. Johh~~sQn, Mayor AT EST: -~f' I . Charlene Friedges, pity Clerk 95190.OT 2 RNK:07 /27/2001 GF ~pit~l a~ ~ a~tP July 3, 2001 6p Michael Sobota City of Lakeville 20195 Holyoke Avenue South Lakeville, MN 55044 Re: 5.9% Fixed Rate Financing for manufacturing facilities and equipment Dear Michael: Are you looking for an economic development resource to help manufacturing companies expand? With rates 2% to 3% lower than conventional financins rates, Industrial Development Bonds are an excellent source of capital for manufacturing companies. Construction companies can also use IDBs to finance stationary cement and asphalt plants. GE Capital can help you and your clients access this financing for manufacturing facilities, land, equipment, and even the acquisition of manufacturing companies. Here's how Industrial Revenue Bonds benefit companies: ? Significantly lower rates than typical financing ? Lower costs: GE Capital eliminates the need for underwriters, trustees, and re-marketing agents ? No need for a guaranty from the local municipality ? Usually no need for a letter of credit for equipment, based on credit ? Amount funded can be as low as $1,000,000 ? Option of both. fixed and variable rates Please call me at (952) 897-5632 to discuss any projects that may qualify for tax-exempt IDB financing. Sincerely, GE CAPITAL C^RP^P44TI0: David Burd Vice President /Senior Account Manager David.Burd@gecapital.com Ever Reliabilit gy y rtners = UPDATE nor ~ finer ~y July 20, .2001 State to begin issuing power warnings to residents New system to encourage common sense load management Minnesota's Commerce Commissioner Jim Bernstein has and we decided to see if there was anything we could announced that the state will begin issuing power supply do to help prevent them in the future." warnings to the public. Similar tc the' warnings people currently receive through the news media for threatening Starting this summer, the state will use two forms of weather, the new alert system will let residents know alerts to warn residents of slim energy reserves. when electric power .supplies are running low.. The Commerce Department hopes the system will encourage Peak Power Watch-Issued when the state's consumers to reduce power usage during periods of electric transmission system is nearing capacity and peak energy demand. requesting conservation. Recent estimates by industry experts show that our Peak Power Warnin4-Issued when a r=ederal region will be 3,500 megawatts short of electricity by Energy Regulatory Commission emergency has been 2006. (One megawatt of electricity can power roughly reported. It will urge consumers to immediately 1,000 homes.) The commissioner said that even though reduce energy use. Minnesota is currently not in an energy crisis, putting a warning system in place is a wise move. According. to Bernstein, even. relatively modest adjustments on behalf of energy consumers, such as "The situation in California certainly has focused our turning off a light or moving computer and appliance attention on energy issues," said Bernstein. "Here in usage to different times- of the day can make a sizeable Minnesota, we are not used to blackouts or brownouts, difference. "Small things collectively can add up to something large." i ~ i ~ ~ ~ ~ ~ a r t ~ ~ Here are the facts... • Coal reserves comprise the greatest share Coal is the only domestic energy resource of our nation's energy resources. We have to increase production levels over the last enough reserves to support a growing coal two decades. demand for well over 250 years. The average price of a ton of coal has de- • Coal, or electricity generated from coal, is clined over the last 20 years -both in real used in all 50 states. and nominal terms. • In 2000, coal was used to generate over Coal prices are not expected to increase 50 percent of ail the electricity used in the appreciably over the next 20 years. United States. Source: Energy Information Administration's Annual Energy Outlook 2001 I'O. &>x 390092.142inneapolis, MN 55439-0092 • 952-835-0829 • wwu~af~ordable-energy.org S _ '3 Gov't Report: Economy to depend even more on electricity Need for reliable energy sources remains critical According to the Energy Information Administration's report, Annual Energy Outlook 2001, the trends experienced over the last 20 years (economic growth, greater efficiency and a move to electricity) are expected to continue over the next two decades. National economic growth is forecast to increase an average of 2.3 percent per year. As a result of greater efficiency, energy use is expected to grow 32 percent by 2020, or 1.3 percent annually. And electricity consumption will increase by over 40 percent by 2020, or 1.8 percent per year. Partners for Affordable Energy (PAE) believes this report reinforces the importance of having a reliable and dependable supply of electricity. To help accomplish this, PAE announced its five-point plan for electric reliability. To learn more about the plan, visit our web site at www.affordable-energy.org. ~ = = Minnkota Power Cooperative to ~ ~ ~ I ~ offer wind energy 1. Close your drapes or shades. Windows are a large source of heat gain in your home. Keep your drapes and The more than 109,000 customers of cooperatives and shades closed during the day and you'll keep unwanted municipals associated Wlth Minnkota Power heat out of your home. .Cooperative will soon be offered a wind energy 2. Ventilate when it's cool outside. Cut your cooling costs option. Minnkota recently signed a 10-year contract by opening windows when it's cooler outside than inside. Wlth Northern Alternative Energy (NAE), a Minneapolis-based wind developer. The contract, 3. Use ceiling fans. Ceiling fans create enough air which includes two additional five-year extensions, movement in a room to make it feel cooler by four specifies that NAE Will build, Own, operate and degrees or more. They use only about as much energy maintain a 900-kilowatt (kW) wind generator near as a 100-watt light bulb. Valley Clty, North Dakota. Minnkota will purchase all 4. Use appliances efficiently. Do only full loads when of the electrical output. using your dishwasher and clothes washer. Be sure to clean your clothes dryer's lint trap after each use. The 11 member-owned cooperatives and 12 municipal utilities associated with Minnkota will sell the wind- . 5. Keep air conditioner outside unit clear. Keep the area generated electricity to customers who have agreed to around it clear of weeds and debris. If air can't circulate pay an additional $3 per 100 kilowatt-hour block. ThIS freely around your outside unit, you'll have higher bills and more service calls. is necessary to pay for the incremental cost of devel- oping wind power, which is more expensive than 6. Turn your thermostat up. Turn thermostats to 78 conventional sources of electricity. NAE has applied degrees when at home; 85 degrees when away. Use fans for federal and state incentives to help reduce the to circulate coot air. cost of wind-power electricity. 7. Install compact fluorescent lights. Replace USing current technology, wind cast be used t0 incandescent light bulbs with compact fluorescent light bulbs. Compact fluorescent lights use 75% less energy. generate electricity approximately 30 percent of the time. Minnkota president and CEO David Loer said 8. Install low flow showerheads. This simple device can that even in areas like the Upper Midwest, wind speed substantially reduce hot water costs. is not sufficient to continuously generate electric energy. "Clearly, there still is a long-term need for 9. Wrap your hot water tank with jacket insulation. If dependable electric power generated from sources your water heater is gas, be sure to leave the air intake vent uncovered. like low-cost and abundant lignite coal." Minnkota's primary source of electrical generation wilt continue to 10. Plug your home's leaks. Weather-strip or caulk leaky be its lignite coat-fired plant located near Center, doors and windows. North Dakota. Heard in the news . '[California s anticipated summer power shortage) presents an enormous threat to the economic we/fare of the Bay Area. " - Conclusion from a study by McKinsey & Co. on the effects that California's rolling blackouts and rising electricity prices will have on California's Bay Area economy. The study also con- cluded that a state recession may be another undesirable consequence. • ~ fro m .~_r~~ry~.~. ~ ~'o~I~e.~ 'o~~~+e .~R~txl ~~ta~~ :u, 9 ,..,r~_ www.collierstowle.com AUGUST 2001 Update On anticipation of the Legislature's action. Our M~sion: Commereial/Industrial It is important to remember, too, that there. Property Taxes are other funding tools available far this kind Cy'eat2yl~ of development. The real impact may be Economic ~t~'h,at happened? felt by corrunLmities in ~-hich TIF represents I=irst., the Tax Bill provides for a reduction of a larger proportion of the tax base-with Vi,CIZIC S`OY' comrncrcial industrial property taxes: .For. the fewer dollars coming in, recevelopment and OuY' LrleYltS :third time in four years, the rate will. drop, to clean-up plans may be put on hold or 1.5 °,'o on the first X150,000 market value and scuttled altogether. 2°/0 over ~ 1.50,000. Scconck, the education le«~ has been shifted and. the transit le~-~- has been ~l'he situation in Minneapolis is a little more I11 TIlIS ISSUe: ' elunuiated, resulting in additional tax savings complicated, suite 'I'IF re~-enues have been for C/I propert<- owners. Anew state propertti~ fiinduig the Neighborhood Revitalization Commercial/ ;tax has been added, but, overall, there will be Project. For a detailed discussion, visit the Industrial significant savins;s for businesses. ~'ICD~s web site, ~~~~~:'~ICD~=~.org. Property Taxes tiy%'hat's the. bottom lined Apartment Taxes Another Premier "1"he average net reduction in C/I property Downtown taxes is a little over 10°~0. 'l'ax structure ~~%hat happenecl% Assignment ;changes will mean that busuiess's share of 'T'he "I'ax Dill reduces apartment taxes and :state property- taxes will drop from 30°~o to increases the amount of federal tax-exempt Colliers Towle ?4.5"'0. (Business makes up about 15`o of bonding available for housing projects. Adds Ketail the tax base.) The intention is to promote development of Specialist: affordable housing, particularly apartments ~E%h rt cloe~ this mean to rede~-clapmcnt and senior housing. Colliers Wins k~ro~ccts? 14 i11'h11' rnonc 4 dry ups High Rankings :The Legislature created a special fund to iti~ ha is the boi:tom line:' Companies ensure that `l'Ir projects at a certain stage of 'T'ax rates will be reduced by ?4.4`;!0. 'T'here Dispose of 'development when the new legislation takes will be r«-ice as much money available in Excess band :ts effect will be able to move forward. rot tat-exempt bonds for hauling projects, and Values Rise ne«,- projects, though, 'I'Ir will likely be a the definitions of affordable housinn have :less popular redevelopment tool. :1s the tas been relaxed. :rare decreases, the increment lowers-the dollar amounts available shrink, and developers must \k~hat does this mean to the markcrplace= bear a greater portion of the development The T«~in Cities metro has seen increases car redevelopment. casts. 1-lo~vcver; with taxes in apartment rents for over ten years. ;lower, developers may not need d1e kind of The changes to the tax structure and the :incentives offered by TkF', and, according .to additional development monies should lead • a Citizens l.eaguc study, TI I~'s popularity as a to an increase in supply and, as a result, the financing tool was on the wane, perhaps in stabilizarion of rents. ~ ~ fit. ~ ~ ~ + ariiiaa~`ii~i+~..~ - Our Mission: Another Premier Colliers Wins Downtown Assignment High Rankings Ct~6C1tZtZg l~lid~a.~est Real, F.rtate 1~eivs announced in Jule that Colliers International is the ECOl'ZOYYIIC Top Investment Sales and Leasing Broker _ ~F.. TTitlue FOY' in the central CJnitcd States with X3.8 billion Y' C1ZG'i'ZtS in transactions in 2000. This month Cortzrrre~cialPrapeTty 1\~esvs t ~ .ranked Colliers Internatiional as the ~rci Largest Property Management Company I11 This Issue: ' in the united States with 465.5 million sq. ft under management. `~'e are thrilled to be CommerciaV ~ part of the Col.l.iers international team. Industrial Colliers Towle vas selected to manage and Companies Dispose Property Taxes I lease. the 1221 Nicollet Ave. Building of Excess Land Another Premier (pictured above), a 132,000 sq. ft. office as Va.IUeS R1Se Downtown building in i4linneapolis' In some sectors of the 'Twin Cities metro Assignment ~ area, land values have climbed as much as Colliers Towle Adds 20`'/o in the last tu-o years. Companies looking colliers Towle Retail Specialist for opportunities to spin off excess land they- Adds Retail i , Colliers '1'o~vle ~~-elcomes no longer need. are taking advantage of these Specialist ~ ' rapidly rising ~-aloes and are selling no~v at %~ndrea Christenson as Senior Sales ~~ssociate premium prices. Colliers Wins High Rankings ~ 'specializing ii retail Proof of this trend is a recent sale of "l S6 acres sales and leasing. in Coon Rapids for Yamaha ~~Iotor Corporation Companies ~ - GIs. Christenson completed by Mark Kolsrud and Deal Driscoll Dispose of _ represents owners and of Colliers'1'o~vle. mother example is a 3-outlot Excess Land as tenants in their retail site totaling 15 acres in IJagan that Buffets Inc. Values Rise propert<~ transactions, focusing her efforts no longer needs. <=~lso in Eagan, E(:OI..~B Inc. on finding sohitions and creating ~ aloe for is selling its excess land. clients. ~~ccording to John Lewman, a 25-year land expert with Colliers 'Towle land values have ~k'ith over 16 years of experience in retail risen dramatically in the last~l0 years. IIe noted propertT- management and leasinng, she has a parcel in iVlaple Grove that he sold for X50,000 worked for t~vo of the largest shopping ~ ~ an acre in 1~)0. 'I"hat same parcel is no« on center management and development the market for ~1?5,(10(} an acre. Similarly; a companies in the narion and has leased I?lymouth site that sold for X35,000 an acre in properties ranging from 50,000 sq. ft. to 1980 just sold for ~"110,000 an acre. 1.? million sq. ft Share with your colleagues... Contact ~~ndrea at 612j 34?-9395 or tY~'e invite ~~ou to for~eard this E-News to )your friends and colleagues. Please rnen~ion that if email at achristenso~n(cc•towle.com they wish to subscribe, they can do so via the subscribe link below for their free copy. If you wish to unsubscribe, please notify us eia • the unsubscribe link belo~~t - subscribe unsubscribe oQQ~n9 ce'~~o h ~ O1 N ~ H ` i~~ y L ~ Yx' V ~ `.k ICJ ~ U ~ I~I~~ ~t O et a ~o wt ~?~a~t 'a Presented by the Minnesota Sho in .Center pp g Association r Minnesota Shopping Center Association The Minnesota Shopping Center Association (MSCA) is a nonprofit trade association that was initiated in 1988. MSCA is the largest statewide organization devoted solely to the retail real estate industry. With over 228 companies and 500 members,. the association represents developers, shopping center owners, brokers, property managers, retailers, attorneys, architects and all professionals serving the Minnesota real. estate industry. Together the members of MSCA own, operate and manage over 50 million square feet of shopping centers in our trade area. MSCA offers its members excellent educational and networking opportunities, market research and trends, as well as participation in governmental affairs. Executive Summary The Minnesota Shopping Center Association Board of Directors and the Legislative Committee, together with the special task force on smart growth, are pleased to present the 2001 "Get Smart on Smart Growth" position paper. As the growing debate about smart growth continues and evolves, MSCA felt it was important to voice its opinion about the issues that surround smart growth. This position paper attempts to focus on the major components of smart growth and how each of those areas directly and indirectly effect the development, ownership and operation of our communities retail resources. We recognize that the term smart growth has varied definitions depending upon your viewpoint and perspective. We did not attempt to address every issue, and perhaps the perspectives we offer may have valid counter perspectives. MSCA strongly believes that the free marketplace should remain the primary generator of our growth. It is imperative that the governmental sector strives to provide opportunities. to enhance the private market efforts while simultaneously focusing its resources on infrastructure priorities such as roads, transit and utilities. "Get Smart on Smart Growth" Minnesota Shopping Center Association Position Paper March 14, 2001 TABLE OF CONTENTS About Smart Growth ..........................................................................1 TRANSPORTATION .....................................................................2-5 TRANSIT 6-7 INFRASTRUCTURE AND UTILITIES 8 Sewer Systems ....................................................................8-9 Water Systems .......................................................................9 Storm Water Systems .......................................................9-10 Electric Utility .....................................................................10 LAND USE ......................................................................................11 Local Zoning ..................................................................11-14 Brownfields .........................................................................14 HOUSING AND LIFESTYLES ......................................................15 Metro Sprawl ..................................................................15-16 Development Standards .......................................................16 Education Issues ..................................................................16 Affordable Housing ........................................................17-18 ECONOMIC ANALYSIS ................................................................19 Tax Increment and Tax Abatements ....................................19 Impact Fees ..........................................................................19 Sales Taxes ..........................................................................19 Real Estate Taxes 20 RETAIL MARKET COMPETITIVENESS ................................21-22 ABOUT SMART GROWTH In many communities across the nation, there is a growing concern that current development patterns - dominated by what some call "sprawl" -may no longer be in the long-term interest of our cities, existing suburbs, small towns, rural communities or wilderness areas. While supportive of growth, many communities are questioning the economic costs of abandoning infrastructure in the city, only to rebuild it further out. They are questioning the social costs of the mismatch between new employment locations in the suburbs and the available work force in the city. They are questioning the wisdom of abandoning "brownfields" in older communities, eating up the open space and agricultural lands at the suburban fringe, and creating more pollution by forcing people to drive farther to get places. Smart Growth attempts to recognize the connection between development and quality of life. Its goal is to leverage new growth to improve the community. The features that distinguish smart growth in a community vary. from place to place. In general, smart growth initiatives seek to focus attention and resources in restoring a sense of community and vitality to center cities and older suburbs. New smart growth hopes to be more town-centered and transit and pedestrian oriented, with a greater mix of housing, commercial and retail uses. But there is no "one-size-fits-all" solution. Successful communities tend to have one thing in common - a vision of where they want to go and of what things they value in their community -and their plans for development reflect these values (International City/County Management Association, 1998). MSCA desires to broaden the discussion about smart growth. We believe that smart growth is really about the big issues of development trends, including issues such as transportation, utilities. and land planning. MSCA believes that smart growth should be about a regionalized approach to coordinate, maximize and make more efficient use of limited resources and land to build and expand our infrastructure to accommodate future growth. MSCA does not believe that smart growth should be about limiting or stopping growth or limiting the options that people have in order to alter the way they live, work. and play. MSCA respectfully offers the following comments on various topics that are the central issues and focus of the smart growth debate. Get Smart on Smart Growth - 1 TRANSPORTATION This section will highlight the Minnesota Shopping Center Association's position on the complicated aspects of the need for improvements and expansion of the current transportation infrastructure in the Metropolitan Area. MSCA strongly advocates that our transportation system needs to be enhanced, expanded and utilized more efficiently. The Metropolitan Council projects that our metro area will increase by approximately 600,000 people by the year 2020, therefore, we must focus our attention on how to transport those people to and from work, play and school. This requires significant public investment for the expansion of all modes of transportation, including roads. According to Anthony Downs, the Bureau of the Census 1991 and Motor Vehicle Facts and Figures 1990 report that, between 1981 and 1989, total highway mileage in the United States went from 3.853 million miles to 3.877 miles, an increase of only 0.6 percent in a period when the number of cars and trucks in use rose by 24.0 percent and total vehicle miles driven soared 33.6 percent. Urban road mileage went from 624,000 miles in 1980 to 753,000 miles in 1989, a gain of 20.7 percent. During the past fifteen years, the intensity with which Americans have used automotive vehicles has risen sharply. This has compounded the increase in vehicle travel resulting from population growth alone. Thus, the number of cars and trucks in use increased nearly 50 percent, and the number of miles driven per vehicle increased 14.2 percent. Hence the total number of miles traveled by all motor vehicles annually soared. 61.9 percent. The number of cars and light trucks [SUV's] available for personal driving during peak periods rose twice as fast as the number of households in absolute terms and one-third faster in relative terms (Downs, 1992, pp. 10-11). Get Smart on Smart Growth - 2 Furthermore, Downs states, "between 1980 and 1989, for example, if a community's population rose 10 percent, the total vehicle miles driven there typically rose 43.2 percent; so congestion probably increased too" (p.37). Thus, based upon these findings, it is logical to conclude that if the Twin City metropolitan area's population, as projected, will increase by 600,000 people, or about 25%, then the total vehicle miles driven may increase by 100%. Further compounding our traffic problems is the fact that we have a freeway system that was designed in the 1950's for anticipated traffic of the 1970's. To accommodate this growth, whether it develops on the urban fringe or in the core area, we will need to build new roadways and expand current ones. It is as expensive, if not more, to replace, expand and upgrade roads in the urban core as it is to build new roads on the urban fringe. Regardless of where this new population flourishes, we face a demand for significant additional road capacity. Therefore, MSCA strongly advocates the creation and expansion of reliable revenue sources to be made available to expand existing roads and freeways and to build new ones. We support the creation of a dedicated state funded revenue source that would be solely used to fund transportation and transit. We would propose that. 75% of that fund be used for new and expanded roads and 25% be used for other transit options. MSCA also supports the creation of a regionalized roadway planning process that would allocate existing resources to projects that have the greatest benefit at the lowest cost to reduce or mitigate congestion. MSCA strongly supports the. goals of the Transportation Alliance and further, MSCA believes that particular projects, such as the expansion of Highways 494, 35W, 694 and the Crosstown, should be of primary focus. In addition, the continuation to eliminate bottlenecks, such as Highway 100, both north of Highway 55 and south of 394 and the reconstruction of the intersection at Highway 494 and Highway 61, Get Smart on Smart Growth - 3 should be prioritized. All road projects should be planned, evaluated and prioritized based upon the projects ability to reduce congestion. Projects such as the currently proposed reconstruction of the Crosstown/35 Commons should be reconsidered and/ar redesigned to not only provide for safety as currently proposed, but also to increase their capacity in order to reduce congestion. It makes little sense to spend $ l00 million on a project of this magnitude when, upon completion, it will not add traffic capacity. MSCA specifically supports one of the Ventura administration's three goals of Smart Growth which calls to "be fiscally prudent by avoiding wasteful spending today and future costs down the road" (Metropolitan Council, 2000) It is a waste of scarce public resources to rebuild existing roads without. expanding them to add traffic capacity. It only postpones, at eventually a greater cost, the requirement that these roads be expanded. MSCA also supports the use of alternative transportation modes, including busing, light rail, car pooling, biking and walking, but these alternatives, in our opinion, will have only a marginal impact on our current and future congestion problem. The short-term solution to congestion is to expand our road capacity and bring it up to the state- of- the-art status that our region once enjoyed. Once that has been achieved, then it may be more appropriate to reallocate our resources to the alternative transportation modes. It is very unfortunate that little has been done over the past fifteen years to keep up the necessary investment in our road infrastructure. However, we now need to act decisively so that we maintain the quality of life that has been so important to this area. In a recent Star Tribune article, MNDOT stated, "65 percent of trips in the metro area are made under congested conditions, and traffic is growing by 4 percent year". MNDOT projects that the number of congested lanes wily increase from 190 miles today to 492 miles by 2025 if no new revenue sources are added (Blake, 2001, p.A14). .Get Smart on Smart Growth - 4 .There are those that advocate that we cannot fix the problem by building more roads. Blake (2001) continues to explain that, the Metropolitan Council has a 10-year plan calling for a doubling of bus service, two dedicated busways, another light rail line, a second commuter-rail line and more freeway shoulder lanes for buses. Those, too, would cost money not now available; an estimated $1.7 billion in capital spending and additional operating funds of about $150 million a year. Transit advocate Chip Welling of St. Paul said road projects have become so expensive that it won't be possible to have both transit and road improvements. For example, the Transportation Department has budgeted $205 million to add a lane in each direction along a 5-mile stretch of Interstate Hwy. 35E north of St. Paul. `For that amount of money we have choices, and I am not sure how well we are considering the choices,' said Welling, who represents St. Paul's Merriam Park neighborhood in efforts to revamp the University Avenue corridor. `As a transit advocate, I think we need to give serious consideration to providing transit service instead of widening the roads. You can't do both. If we make it easy to drive, people are going to drive' (pp. A1, A14). MSCA would support the expansion of the road because it would continue to meet the needs of the majority of citizens. The MSCA does not support the idea of social engineering people's lives to make costly transit alternatives work. MSCA strongly advocates the increase in state spending for roadway expansion, including, if necessary, the reduction or elimination of our recent tax rebate trend in order to finance these critical infrastructure needs. If one could calculate the overall cost to our economy, productivity and lives due to the increasing time spent in traffic, we believe that most taxpayers would happily give up the few hundred dollars in rebates to lower their frustration and increase the time spent in a productive endeavor or simply more time spent with their family. Get Smart on Smart Growth - 5 TRANSIT MSCA supports the most economical and efficient expansion of the public transit systems in the Minneapolis/St. Paul Metro area. MSCA supports the creation of a dedicated State funded revenue source that would be solely used to fund transportation and transit. We suggest that 75% of that fund be used for new and expanded roads and 25% be used for transit. While MSCA supports. increased funding for public transit alternatives for consumers, new public transit projects should occur in conjunction with increased funding for the existing roadways. For example, we oppose the proposed Riverview Corridor bus way from downtown St. Paul to the Airport via the West 7th Street corridor. Initial plans call for the elimination of two lanes of traffic in the middle of the existing roadway for a dedicated bus lane. The result would be one-lane traffic each way with a busway in the two middle lanes, reduction and elimination of on-street parking, and would require pedestrians to cross traffic to board and depart buses. Other ramifications would be increased travel times along this corridor due to greater automobile congestion and an overall safety concern which would increase during periods of heavy snow when snow banks would further restrict the size of the traffic lanes. We encourage multi-modal transit and transportation alternatives for consumers, businesses, and homeowners. However, an increased supply of transit options should give consumers, businesses and homeowners more choices and greater freedom to chose convenient ways to travel, not restrict options and make all travel options more burdensome. MSCA strongly advocates that each .transit option be considered under a cost/benefit analysis that would prioritize each option on its metro- wide basis and judge its impact to reduce vehicle congestion while minimizing the impact to other currently operated transit options. With the recent approval of federal funding for the Hiawatha Light Rail Line and the proposed funding for the North Star Rail Line, we should ask ourselves if other less expensive, more flexible alternatives exist. MSCA believes that expansion of the bus system and creation of additional highway lanes dedicated to buses will give us greater future Get Smart on Smart Growth - 6 flexibility. These busways may require additional right-of--way acquisitions which MSCA believes is critical, not only to increase transit and transportation capacity now, but to plan for future increases. New public transit alternatives will require a drastic change from the majority of the population whose behaviors are now rooted in the freedoms & options of traveling in private automobiles. According to figures on public transit from the City. of Portland's Tri `Met Council, their light rail line, completed in 1986, experienced 50% less ridership than initially estimated five years after its completion (Charles, 2000, p.127). Furthermore, Portland's light rail system took twelve months longer to build than anticipated and was 55% over budget. In fact, further studies (O'Toole, 1996, p.22) reported that Portland's light rail system merely displaced riders that were previously riding public buses and the new light rail line gained relatively little in new public transit users. We must remember that building a light rail system will not necessarily make people use it, particularly since residents of the Minneapolis/St. Paul Metropolitan area have relied on private transportation for many years. .MSCA supports increased funding for transit, but advocates that the majority of funds be used for park and rides and new busways as an alternative to light rail due to their lower initial construction cost, operating expense and greater flexibility when compared to light rail. Often, alternative transit proposals are considered to be a catalyst for redevelopment. MSCA supports redevelopment and the use of alternative transit as a redevelopment incentive. However, if redevelopment is a primary consideration for the construction of the alternative transit, then MSCA endorses the use of governmental redevelopment programs to pay for the alternative transit cost and thus discourages the use of scarce transportation/transit funds to pay for these redevelopment catalysts. Get Smart on Smart Growth - 7 INFRASTRUCTURE & UTILITIES Recently, due. to the California electrical crisis, it has suddenly become apparent that we are overburdening our utility infrastructure. Whether this situation is caused by lack of governmental controls, too many governmental controls, growing population, reduced natural resources, or any number of other reasons, we need to seriously consider how to create and distribute utilities while minimizing their use and maximizing efficiency. Although Minnesota does not currently face this crisis situation, we are not immune from it and could experience similar shortages in the next few years. In order to accommodate the predicted population growth, and as part of smart growth, prudent planning requires us to address the need for future utility infrastructure expansion. Sewer Systems For many years, the Metropolitan Council through its Metropolitan Urban Service Area ("MUSA") boundary has attempted to control growth in the Twin Cities metropolitan area but has received mixed results. Growth has continued outside the MUSA boundary, and according to a recent study by the Builders Association of the Twin Cities ("BATC"), 25% of new residential development in the Twin Cities metropolitan area lies beyond the MUSA line. The primary reason for the continued growth outside of the MUSA line is directly related to lower land values, construction costs and governmental fees. Arguably, the MUSA line has actually contributed to urban sprawl in the metropolitan area rather than its intended use, to control growth. In many cases, houses built outside the MUSA line require larger lots in order to meet well and septic system requirements. Thus, in the event the MUSA line is expanded, these areas become very difficult and expensive to retrofit for denser development to allow the installation of water and sewer systems. MSCA supports either the elimination of, or considerable modification to, the use of the MUSA line. MSCA strongly supports the BATC's call for atwenty-year supply of buildable residential land within any control area. This .amount of land is critical to maintain competitive Get Smart on Smart Growth - 8 market forces so that land prices do not escalate beyond the level needed to build reasonably affordable housing. Water Systems For many years, the water systems and plants in the metropolitan area have been controlled at the municipal level, while the sewer systems have been operated at a regional level. The MSCA supports the debate and consideration of whether the water systems in the metropolitan area should be regionalized. -If it makes economic sense to have a regionalized sewer system, it may also be more efficient and economical to have a water system that is constructed, operated and maintained on a regional basis. Storm Water Systems Storm water systems are currently constructed at both a municipal and regional level and involve a tangled web of different governmental jurisdictions that have overlapping mandates and responsibilities. Currently, most new retail projects need a combination of approvals for storm water from the City, County, State, local Watershed District, DNR, Army Corp of Engineers and the U.S. Fish and Wildlife Department before a project can be built. In addition, the federally mandated National Urban Runoff Policy ("NURP") requires that any development over five acres construct and maintain a storm water treatment pond to treat the runoff water before it is released to the greater water system. MSCA strongly supports the goals of controlling, containing and treatment of all storm water runoff; however, we recommend that consideration be given to modifying the current overlapping process and regulations. First, the MSCA endorses regionalizing storm water treatment and storage facilities and would support the State Legislature's consideration of this issue. If one objective of smart growth is to maximize the use of land, it makes little sense to have individual treatment ponds scattered about the landscape. Second, the MSCA endorses the elimination of all currently constituted watershed districts in the metropolitan area and supports combining the districts into a single metro-wide watershed district with standardized rules, regulations, processes and fees. Get Smart on Smart Growth - 9 MSCA encourages the Metropolitan Council to adopt a regionalized storm-water treatment and retaining program to consolidate these facilities into a more logical and efficient manner. The goal of this consolidation would be to eliminate the current city-by-city storm water charges and fees and replace it with a metro-wide standard fee and charge. Electric Utility MSCA supports competition in the electric industry. However, before any attempts are taken to deregulate this industry, all consequences should be thoroughly analyzed to avoid duplicating California's experience. MSCA supports the proposed legislation to eliminate the personal property tax currently being paid by the electrical generators in this state, and we hope the State Legislature will pass such legislation this session. We believe that elimination of this tax will facilitate the creation of additional power generation within our state boundaries by making production more economical. Get Smart on Smart Growth -10 LAND USE Land use and zoning are core issues in the smart growth discussion. These topics invoke considerable debate ranging from urban sprawl, urbanization, new-urbanistic designs and densification, to cost of roads, transit and infrastructure. MSCA advocates that land use and planning issues should be primarily left at the local municipal level. We believe that the planning and park commissions and city councils, in conjunction with municipal staffs, are best suited for the development and implementation of land use rules and regulations in their communities. Each municipal body should be .free to create a flexible land use plan that reflects the desires of its citizens. MSCA believes that the MUSA line should be eliminated and replaced with recommended development and density standards for each local community. Each city would then be free to allocate these criteria across its community. The Metropolitan Council, as part of the fiscal disparities legislation, could reward each community economically based upon compliance with the required development density plan in conjunction with each Community Comprehensive Plan. Using this methodology, the local community. would have economic incentives to increase densities. Communities that choose not to meet their density requirement would do so knowing that they would not receive incentives. Local Zoning Contrary to the goals of smart growth, most municipal zoning ordinances do not encourage densification of development, they actually discourage or prohibit it. For example, most communities have zoning codes which impose excessive parking and landscape requirements (e.g., up to 30% of the parcel must be landscaping), limitations on the "Floor Area Ratio" -the square foot of building to each square foot of land -building height restrictions,. minimum setback restrictions from streets and property lines and NURP ponding requirements. Today most suburban communities, under their current zoning ordinances, cannot process a project that would contain a mix of uses, such as both retail and housing. Get Smart on Smart Growth - 11 MSCA strongly advocates that the Metropolitan Council, in cooperation with local governments, the League of Cities and the Association of Metropolitan Municipalities, create a task force to assist each local community with updating its zoning ordinances to allow higher density and mixed-use projects to become more of a reality. Many times our members have proposed developments with higher densities that have been denied or significantly downsized due to neighborhood or community pressure. Because of these issues, MSCA supports and agrees with the Report of the Mayors' Regional Task Force (2000) in their request to the State Legislature to "revise state law to make it easier for local governments to rezone land, by eliminating the super majority requirements and veto power by adjacent land owners in cities of the first class" (p. 18). MSCA also agrees with and supports the Mayors' Regional Task Force (2000) that encourages cities to: • Work with the Metropolitan Council through the Association of Metropolitan Municipalities to jointly develop a survey of local governments in the urban service area to gather baseline information pertaining to communities' zoning and subdivision regulations. The survey would take place once cities have had the opportunity to revise their ordinances to make them consistent with their updated local comprehensive plans. We ask that this survey be conducted in 2001 and that the results be reported to all cities and the broader community. • Ensure that local zoning and subdivision regulations make it possible to achieve the affordable housing and density goals set forth in land use plans. The Metropolitan Land Planning Act requires this. We recommend that cities self-monitortheir progress in achieving their stated goals, and report the results publicly to citizens and to the Metropolitan Council. Get Smart on Smart Growth - 12 i • Establish higher densities, but ensure that the higher densities help cities achieve their affordable housing goals. We encourage cities to develop standards and guidelines for residential development that is more compact and that produces housing which is high quality, attractive, and at least 20% affordable. • Adopt and use flexible land use regulation practices such as adjustable requirements, zoning overlays and special zoning districts. Such practices can promote the production of quality affordable housing by enabling more compact growth and fostering design solutions to meet residents' concerns and to ensure that a development fits well into the neighborhood. Flexible practices can also help create or enhance a town center or central destination by encouraging mixed-use developments which include an affordable housing component (pp. 17- 18). However, a recent study by the BATC revealed that the density goals for two cities were not achievable under existing zoning and subdivision requirements. In one of the cities, the comprehensive plan called for a development goal at 4.9 housing units per acre. When zoning regulations such as setbacks and street widths were applied to the design of a development, only 2.1 housing units per acre could be achieved. MSCA believes that local communities not only need to update, but also need to conform their zoning ordinances to their comprehensive plans. MSCA also supports the development and redevelopment of urban areas and brownfield sites to bring state-of--the-art retail opportunities into our local urban areas. MSCA supports land use planning that incorporates commercial areas into neighborhoods to facilitate the use of shopping centers by means other than vehicles. By incorporating commercial areas in close proximity to residential, we will reduce vehicle trips and parking. An example of this is one of our area's major grocery store chains Get Smart on Smart Growth -13 internally requires a parking ratio of five stalls per 1,000 square feet of store area in the suburbs. but only requires a parking ratio of four stalls per 1,000 square feet of store area in the core cities. Brownfields A leading aspect of smart growth is to attempt to intensify development in the core part of the metropolitan area. This scenario often results in the redevelopment of Brownfield sites. In spite of recent legislative efforts to mitigate the environmental risk to the redeveloper, it still presents a long, cumbersome and expensive process. Many of these sites require hundreds of thousands of dollars for investigation and remediation. Although there are governmental processes to assist with these costs, many times this funding is limited or focused on the most contaminated sites, leaving the less polluted sites with little or no financial assistance. MSCA supports the redevelopment of Brownfield sites and would also support increased governmental funding to assist in the development of all the sites. MSCA endorses all continuing efforts to streamline the investigation, review and approval of these sites by the respective government agencies. Get Smart on Smart Growth -14 HOUSING & LIFESTYLES Most urban planners will tell you that residential development requires about 50% of the land area within their communities. The remainder is designated for all other uses, including retail, commercial, office, ponds, wetlands or other preservation areas, schools and governmental buildings. To fully understand the impact of smart growth, it is important to understand its impact on residential growth and development. A recent .study titled drawl in California (Kolankiewicz & Beck 2000, p.4) identified that there is a direct 100% correlation between growth of population and the growth in sprawl. This study reports, California's population boom has been the number one factor in the states relentless urban sprawl, even though most anti- sprawl efforts exclusively target consumption factors. The supposedly gluttonous appetite of California citizens for more and more urban space per resident has in fact played little role in the sprawl. In most urbanized areas, land per resident did not grow at all -and it usually shrank in both the central city and in the suburbs. Thus, the average Californian was consuming land in an increasingly environmentally .responsible way; but there were so many more Californians each year that sprawl marched ever outward. The volatile growth of California's population far outweighed the sprawl effect of all other factors combined. Metro Sprawl Thus, according to Kolankiewicz and Beck, and other recent studies, the growth of population is the key ingredient to urban sprawl. The Metropolitan Council projects that the Twin Cities will add 600,000 people by 2020. If we currently average 2.7 people per household, this will result in the needxo construct 222,000 new housing units by 2020. The Metropolitan Council regional plan hopes to achieve a housing to land ratio of 3 units per acre and thus we need 74,000 acres of developable land to accommodate our residential growth to 2020. If residential land is approximately 50% of land usage, we then need Get Smart on Smart Growth -15 148,000 acres of developable land to accommodate the requirements of these additiona1600,000 citizens. The Metropolitan Council and the BATC have both recently completed studies of the available residential land within the MUSA line. Although the studies suggest differing results, both indicate that our current inventory of developable land is below what will be needed to accommodate anticipated growth using current development standards. Development Standards Most residents, nearly 80% of the Twin Cities, live in detached, single- family residences. Most historical factors that caused this are attributed to the public's preference of housing style and encouragement by the communities as they developed. Today, most local communities still have zoning ordinances that favor the development of detached single-family homes. These factors include minimum lot sizes, building setbacks, limitations on the number of housing units per acre and high fees for permits, SAC/WAC and other charges. To incorporate the various smart growth ideals, we will need to change our views on how and where we live. Unfortunately, this change requires a significant marketing campaign to try convincing people to consider modifying how they live. MSCA hopes that smart growth will not become a tool that limits the housing options that are currently available. MSCA believes that personal choice and the free marketplace should be the primary motivating factors for housing and development. Education Issues Some of the most desirable and expensive places to live in the Twin Cities are directly related to the quality of the schools in that community. If, under smart growth, we want people to choose to live within the existing urban infrastructure, we need to provide high- . quality schools and teachers in those areas. Without this commitment to education it will be very difficult to convince families to stay or relocate into our urban and first ring suburban areas. Get Smart on Smart Growth -16 Affordable Housing Another major issue facing our area is the significant decrease of affordable housing and work force housing. It is not economically feasible for the private sector to develop and build affordable housing unless governmental financial assistance is provided. Before we suggest allocating additional new governmental funding to this worthwhile purpose, MSCA encourages government agencies to reconsider their current restrictions and fees that add to the cost of affordable developments. Most local governments now charge considerable fees to all new residential developments. In fact, some municipalities have charges that total as much as $25,000 per unit of housing. The Mayors' Report (2000) states, "a recent BATC study suggested that a $10,000 increase in the price of a home puts the house out of reach for 40,000 families" (p. 18). In addition, Minnesota's high property taxes directly result in housing that is not affordable. The report describes that "the effective property taxes for multi-family housing in 2000 are 3.2% versus the effective tax rate for homesteaded properties of 1.4%. If rental properties paid the same rate as homesteaded properties, their tax burden would "decrease by $138 million. in the year 2000" (p. 18). This high property tax is one of the major reasons for the lack of new multi-family construction, as well as a vacancy rate of 1.5%. Lastly, the vast majority of moderately priced housing is now being built beyond the MUSA line, in such places as Wright County. This factor is due to the lower price of land and lower governmental fees. The use of an artificial boundary line to constrict development may have positive aspects elsewhere, but it only adds to the cost of land and construction and makes affordable housing very difficult within its limits. MSCA supports the Mayors' Housing Task Force recommendations to encourage each city to review and adjust the development and permit fee systems to make sure they are fair and equitable. and to consider waiving fees for affordable housing developments: MSCA agrees with and adds to the Mayors' Task Force in its request that a task force of Get Smart on Smart Growth -17 the Metropolitan Council, the Association of Metropolitan Municipalities, the Builders Association, the National Association of Industrial and Office Parks and the Minnesota Shopping Center Association be commissioned to study the impact of municipal fees on affordable housing, as well as on all residential, commercial and industrial development. Get Smart on Smart Growth - 1$ ECONOMIC ANALYSIS It is anticipated that the concept of smart growth will require increased public spending to finance transit initiatives (i.e. busing and light rail), affordable housing initiatives and redevelopment (retail and non-retail) in areas that will not support redevelopment without government subsidy. Tax Increment and Tax Abatements Currently, tax increment and tax abatement financing are one of the few financing redevelopment methods available to municipalities. MSCA supports the limited use of tax increment and tax abatement finance as an important tool in accomplishing redevelopment. To the extent that the legislature wants to promote redevelopment in the core area, these finance alternatives are very useful xools. However, it is important that these local financing tools be used on a select basis by local governments and not be used to compete with other local communities to attract business and development. Impact Fees Impact fees generally refer to fees demanded by municipalities as a contribution to infrastructure improvements needed to support proposed new development. Most impact fees in the State of Minnesota have been unauthorized by the State Legislature. MSCA believes that impact fees can only be justified if there is a nexus between the proposed development and pricing of these fees. Additionally, such fees should be uniform across the metro area, imposed only when there is a rational relationship between the development and benefit derived by the development and the fee imposed. MSCA would strongly disagree with any attempt to broaden the statutorial authorization for new impact fees. Sales Taxes Currently, the Governor's proposed budget calls for a reduction in the sales tax rate and the expansion of the sales tax base to include services. The expansion of the sales tax to construction, real estate brokers, accountants, attorneys, property management, etc., will have a strong negative impact on the real estate industry and corresponding on any efforts to promote smart growth initiatives. Get Smart on Smart Growth -19 Real Estate Taxes .According to the recently completed MSCA annual real estate property tax comparison study (2001), Minnesota retailers pay between 25% to 400% more in real estate taxes than stores in other comparable markets in the United States. In spite of recent efforts to reduce commercial/industrial property taxes, Minnesota still ranks amongst the highest in the country. MSCA strongly supports the Business Coalition efforts to continue to seek reductions and simplify Minnesota's burdensome commercial and industrial real estate taxes. One of the primary goals of smart growth is to focus development and redevelopment into the areas that are already served by infrastructure. The economics of developing in in-fill locations are very expensive, primarily due to higher land prices, construction costs and governmental process and fees. This expensive development, combined with high real estate taxes, is difficult to justify economically. In order for smart growth to be successful in Minnesota, we need to be competitive with similar markets and MSCA would strongly oppose any efforts to increase commercial property taxes as a way to raise revenues to support smart growth, operating losses for transit or any other program. The high commercial property taxes in Minnesota result in higher prices for goods and services on every consumer purchase in this State. This hidden tax is a major obstacle for new development and for new retailers to enter our marketplace and will ultimately be an obstacle for smart growth. Get Smart on Smart Growth - 20 RETAIL COMPETITIVENESS MSCA believes that quality retail goods and. services, at a fair price, are an integral part of the overall "quality of life" factor for Minnesotans. We ask the public sector to assist the private sector in creating a vibrant and competitive retail environment when forming public policy and planning for retail. The ongoing debate about smart growth needs to support all types of market-driven retail developments, from "boutique" small shops to "big box" retailers. Today's consumers demand these types of choices. The public and private sectors need to work together to accommodate consumer demands to ensure that the best retail offered is located here in Minnesota. MSCA agrees with the Metropolitan Council's Chairman, Ted Mondale, when he recently said, "big box is not going to go away. I work three blocks from a Home Depot and the parking lot's as full as a casino. We have to make sure that what we do is realistic, that we're working with real plots of land and that designers' designs are realistic and pass muster with builders and developers" (Peterson, 2000, B2). In order to attract and retain viable retailers to Minnesota, we must assure retailers that they can operate their business in a profitable manner. Most retailers have finite resources for expansion. Therefore, they are very careful and selective when choosing to enter a new market. We need to create an attractive environment so retailers choose Minnesota when considering expansion. Unfortunately, our current market is not as competitive as it needs to be. According to MSCA's Comparative Retail Property Tax Study for the Year 2000, Minnesota ranks number one in highest property taxes when sampled against other similar sized markets such as Denver, Milwaukee, Dallas/Fort Worth, Detroit, Des Moines and others. Other unwelcoming factors in Minnesota that may affect a retailer's expansion decision are: unclear and unpredictable development guidelines, inefficient and unaffordable sites with restricted access, Get Smart on Smart Growth - 21 cumbersome review and approval timelines, unreasonable governmental fees and unworkable government required design concepts. MSCA supports policy and planning that encourages opportunities for consumers to comparison shop for goods and services. Additionally, we must realize that high development and operating costs for retailers are ultimately passed on to the consumer, making Minnesota a less affordable place to live. A healthy and competitive retail environment relies on vibrant communities, together with jobs, housing and effective, convenient transportation. Successful retailers require a solid labor force together with good facilities at operating costs that make it economically feasible to operate. MSCA supports and encourages Minnesota's legislators to continue to reduce the unfair property tax burden on commercial business in order to make Minnesota competitive on a national basis. MSCA hopes that the continuing debate on smart growth creates an environment that fosters free market based retail development and that smart growth does not, through additional government controls, become an instrument for new burdensome rules and regulations that will add to our already high construction and operating costs, creating an unintended consequence of making Minnesota less competitive in .today's global economy. Get Smart on Smart Growth - 22 RESOURCES Anderson, G. (1998, July). International City/County Management Association with Geoff Anderson. Whv smart growth: a primer. Blake, Laurie (2001, February 11). Getting out of a jam. Star Tribune, pp. A1, A14. Builders Association of the Twin Cities & Center for Energy and Environment. (2000). Fees, infrastructure costs and density...their impact upon theTwin Cities re Tonal growth study. Minneapolis, MN. Cascade Policy Institute. (1998, June). Beyond zoning: land use controls in the digital economy. (Policy Summary No. 106S). Portland, OR. Charles, John. Charles, John. (2000). Lessons from the Portland experience. Shaw, J. S. & Utt, R. D. (Eds.) A guide to smart growth (pp. 119-133). Washington, DC. Downs, Anthony (1992). Stuck in traffic: coping with peak-hour traffic con esg tion. Washington, DC: The Brookings Institution. Economic Development Association of Minnesota. (2001). Legislative Policy Positions 2001. St. Paul, MN. Hage, Dave (2001, January 21).Mile-high ambition? Star Tribune, p. A1. Larson, Lori & Cook, Arne (2001, January 22). When `smart growth' means no growth. Minnesota Real Estate Journal, p. 4. Mayors' Regional Housing Task Force (2000, November). Affordable housing for the region: strategies for building- strong communities. St. Paul, MN. Metropolitan Council (1998, November) Twin Cities metropolitan area city level populations. www.metrocouncil.org/metroarea/levpop. Metropolitan Council (2000, October). Growing smart in Minnesota. www.metrocouncil.org/planning/sn?rtgrowth. Minnesota Shopping Center Association (2001, February) Comparative Retail Property Tax Study for the Year 2000. Minneapolis, MN. Mondale, Ted (2000, October). Metropolitan council. What is smart rg owth? www.metrocouncil.org/mnsmartgrowth. O'Toole, Randal (1996). The vanishing automobile & other urban myths. Portland, OR: The Thoreau Institute, p.23. Peterson, David (2000, November 12). Met Council turns to `smart growth'. Star Tribune, pp. B1-2. Peterson, D. & Duchesne, P.D. (2000, November 30). Met Council tells suburbs to add affordable housing. Star Tribune, pp. A 1, A2 L Von Sternberg, Bob (2001, February 11). Since early 1980's, traffic congestion in Twin Cities area severely increased. Star Tribune, pp. A1, A14. 2001 MSCA SMART GROWTH TASK FORCE Lloyd Johnson Mary Honess SuperValu Inc. Dorsey & Whitney LLP Larry Martin Kelly Doran Larkin, Hoffman, Daly & Lindgren, Ltd. Robert Muir Company Zack Johnson Joe Nunez AMCON Construction Ca Target Corporation John Trautz Bruce Carlson Reliance Development Company, LLC United Properties Tom Palmquist Howard Paster Ryan Companies US, Inc. Paster Enterprises Craig Estrem Danny Queenan Madison Marquette Realty Services Opus Northwest LLC Dean Wieber Steve Mosborg Great Clips, Inc. Park Midwest Commercial Real Estate Bob Lucius RSP Architects Ltd. 2001 MSCA OFFICERS. DIRECTOR & STAFF OFFICERS Brent Habeck Michael G. Sims Brookfield Properties United Properties President 2"d Vice President/Secretary Kathy Anderson, AIA James M. Bifaro KKE Architects Jmb Realty 1S` Vice President Treasurer DIRECTORS Peter C. Austin Douglas Sailor Welsh Companies Park Midwest Commercial Real Estate Stacey Cunningham, CMD Steve Dombrovski Brookfield Properties LLC Suntide Commercial Realty Kenneth M. Vinje, CSM Tom Palmquist Kraus-Anderson Companies Ryan Companies. US, Inc. Jill Hagen, CCIM Kelly J. Doran United Properties Robert Muir Company STAFF Karla Keller Torp Stephanie Salo Executive Director Assistant Director SUNDAY, AUGUST 19.2001 STAR TRIBUNE • PAGE Dl•1 ;;e e, BUSINESS FORUM ~ FEEDBACK: To submit a Forum wmmentary or a letter to the editor, call 612-673-9071 or fax Business Forum Editor lobo Oslund at 612-673-7122, or a-mail him at oslund~startribune.com. Controversial subsidies have focused public attention on the value of tax increment financing. But a closer look reveals the benefits of this economic development tool • eo ersl eo By B~ TobM and Tom fiaxton for subsidies. The law also re- ecant articles in the quires a Public hearing about Staz Tribune cast lazge subsidy proposals. A subsidy recipient who do not ~ tax-intxetnent fi- meet public goals is regttired nancing, or TIF, as tr ~ arc to repay the subsidy with in- i. an treaponsible ¦tr oaraat w w w taa " serest. giveaway to developers at tax- In 1999, the Minnesota De- payera' expense. ~ ~ ~ ~ ~ ' panment of Trade and Eco- But those articles are not r• ~ nomic Development reported the whole story on TIF, which actual full-time ob creation ire carbons actually has performed very ~ and wage levels for 344 active weU as a tool for creating and subsidy agreements signed in 891 Tobin and Tom Saxton are retaining jobs in Minnesota. the state from mid-1995 to the principals of (2iESA Partners, The fact is. TIF is one of the end of 1998. The report found the Minneapolis-based affiliate few economic development that these agreements were of a national corporate real es• tools that Minnesota has. And, llR~ G STUIiF: involved in the creation of fate advisory firm that has of• by far, it is the most important , , , . ANTIQUES ~AFE 6,883 full-time jobs, almost (ices in 22 U. S. ctties. Their e• one. a r. x half of them paying at least mail addresses are btobin~ Moreover. T[F has worked 512 an hour. TIF accounted rxesapartners.com and tsexton in Minnesota as the Legisla- for 42.5 percent of the value of ~cresapartners.com. tore intended it to work, and - R - e' the subsidy agreements arts- _ it has been refined over the lyzed in the study. ~ ~ ~ ~ ~ ~ years by amendments that g - ~ Another important finding: have made it an even better 44.5 percent of the subsidy issue. Many communities, tool for building and main- Star Tnbune ausvatbn br Fm Freitag agreements were with manu- particularly its growing sub- taining the state's economy.. facturers -more .than three orbs, such as Eden Prairie and The basic idea behind TIF is times the distribution to any Blaine, aze hard pressed to to use future real estate taxes other sector. This indicates a provide enough affordable to finance current develop- thing. In the case of TIF, that assistance package that in• search, technology and manu- tendency to use subsidies to housing for the employees of meet, which in rum, creates something is a portion of real eluded the city's TIF invest- factoring positions. atvact higher-paying manu- manufacturing firms in those and retains jobs. estate taxes. Most contmuni- meet of about 5360.000 for in- Companies located in the factoring jobs. communities, and TIF is one During the past decade, des that have used TIF have fraswcttue and site im- Fairfield complex include In the state's two major cif- tool they can use to expand when economic development used it judiciously and care- provemants. Hearth Technologies, the paz- ies, TIF has been an extremely housing options. officials from other states az- fully weighed the costa and Under the nine-year az• ens company of fireplace important tool for restoring In our opinion, TIF hes rived in Minnesota to woo benefits associated with it. rangement, the company wlll manufacturer Heat•N-Glo, and maintaining economic played arole -not the lead- businesses to move to lower- pay real estate taxes on only which constructed a 75,000- health. Leaving aside the con- ing role, but an important tax, warmer climates, or when the land and 10 percent of the square-foot corporate head- troversy over whether TIF supporting role - in the global wmpeddon made it at- ~ nF ~ new building. In return for quarters and research-and-de- should have been used to sub- achievement of a healthy, di- ttacdve For businesses to subsidies, the company has vetopmant facility; Technical sidize office building con- verse economy that includes move jobs out of Minnesota, One of many examples in built a facility worth 52.5 mU- Methods Inc., a pattern male- sttucdon on the NicoUet Mall,- manufacturing. our state had few craws in its which a Minnesota municipal- lion, not counting equipment, ing and prototype manufac- we should not overlook the if our state is going to com- quiver. ity used TIF to build its job sod committed to creating 89 tuner of aerospace and coin- valuable convibudon of TIF pete on a national scale, we We couldn't lower taxes base was the 1995 TIF invest- new jobs in Monticello. mercial applications, and New to urban job creation. have to recognize that mast overnight. We couldn't change meet of 51.9 million by the In Lakeville, the Fairfield Morning Windows, amanu- This has happened primar- other states have economic the weather. We couldn't - city of Bloomington to obtain Business Campus, near Inter- tacturer of custom-designed Uy by using TIF for the clean- incentives that equal or ex- and didn't want to -offer a 5150 million investment by state 35 and County Road 70, windows. up of polluted industrial sites Geed what Minnesota offers. cheap labor. Seagate Technology. The proj- is one example of the success- -old railroad yards and oth- TIF is not perfect, but for Instead, many municipal- ect, awafer-fabricating facili- ful use of TIF to enhance the A~~~~Ily er underutiUzed vacts of land. many yeazs it has been the ides took advantage of the ry, created 350 new jobs, job base. The campus was de- With TIF, the cost of cleanup most effective economic de• state law authorizing TIFs for which paid, on average, more reloped in 1996 with the issu- Statewide, economic Bevel- is repaid by the increase in velopment tool that Minneso- development subsidies need- than S13 an hour. Had they mce of 53.765 million of tax- opment TIFs have served the real estate taxes generated by to communities have had in ed to retain or create jobs. not provided the furancial in- naement bonds to finance public good. Amendments to development on the site. the intense competition for Philosophically, we don't centive, city officials have said the infrastructure improve- the original legislation have TiF also is being used sue- jobs. Were it not for the ability see anything wrong with in- that project would not have meets and provide land write- closed loopholes and institut- cessfully to increase the sup- to offer economic subsidies to vesting cotnmunity resources been built, and those jobs towns. ed the nation's strictest sys- ply of affordable housing. manufacturers, Minnesota in job creation. Progress al- would have moved overseas. Today, city officials say, the rem of oversight. which is not only a housing. would find itself today with far ways requires give and take, Another example of job :ampus has a combined prop- For example, municipal- issue but also a work force fewer weU-paying jobs. and in order to attract or re- creation with TIF is the re- •rty market value of more tries must report progress to- tain jobs that help keep a candy opened Twin City Die ban 512 million and provides ward meeting the Job ere- town viable, a community Castings Co. facility in Monti- employment opportunities for ation, wage and other goals may have to give up some- cello, built with an ewnomic tbout 3011 people in office, re- that provide the justification 30A August 18, 2001 THISWEEK F~ Airlake receives fiber-o tic connection p by John Sucansky the park online with the rest of The fiber optic line itself is Staff Writer the government facilities. made of a .bundle of glass The city has a network strands, each the circumference Lakeville's Airlake Industrial capacity lease agreement fora of a human hair. Park recently upgraded to fiber citywide fiber optic network According to Lakeville optics. linking all the city buildings like Cable Coordinator Jeff Lueders, Charter Communications the Fire Department, Police the glass strands carry laser- installed approximately one Department, City Hall, Water generated light impulses that mile of fiber optic cable through Treatment Facility, liquor transmit sound, graphics, video the park in order to fulfill its stores, senior center, and in the and data. contract with the city of future, the Lakeville Area Arts He said in contrast to copper Lakeville to provide high-speed Center. cable, which offers speeds of access to all of the city s build- According to Shnyder, the data transmission up to 155 ings. project in Airlake is not yet megabits per second, the fiber According to Clayton complete, as no cables have optic cable has speeds up to 2.5 Shnyder with Charter, the cable been spliced into the main trunk gigabits per second. The fiber was laid from the intersection of that was recently buried. He said optics also offer approximately Cedar Avenue and Highway 50 the main trunk will have branch- .150 times the carrying capacity to Hamburg Avenue within es spliced in to head toward area of copper wires, he said. Airlake. businesses. A fusion splicer is "Two strands of fiber optic The main reason behind the used to burn the two pieces of cable carry as much information installation was to bring the glass together in the trunk and as 48,000 strands of copper city's maintenance building in the connecting cables. wire," said Lueders. -mss _ . Page 16 FOC~Si July 23, 2001 TECHNOLOGY bust leaves holes ~ n rea I estat m~rt~~ : v.-~~ ( _ t t 'e qtr `C COMPANIES STRUGGLE ; ~i.~~~~-~ R°~..' TO FILL SUBLEASE SPACE j S y by essica ~~riffith ~ _ early everybody knows a few some- bodies ~~hn were laid cff after a soft- ware ccmp.:, ,.;~;.ed or a dot-com dot-died. r Each of those empty cubicles represents a few more square feet in the ever-growing pool of suh+e~±t~~ space. ~",lthough business- n es in all sectors are cutting back on real } estate needs, the technology downturn has helped crr~Ltz the largest sublease market " in recent years. ~ . ~ " ,x "There isn't a week that goes by with- out someone wanting to talk to me about subleasY ~ r,ac•c . ~a~~a ~acott Frederiksen, ~ senior vice president with Welsh Cos. LLC In Bloomington. PHOTO COURTESY OF V<'FLSH COti. LLC Tracking sublease space figures is not an Scott Frederiksen exact science. ane-3 ever;~_ne has a slightly different view of the market. The Twin Cities metropolitan area has about 2 mit- In Chicago, 10.5 million square feet of lion square feet of office sublease spare office space is available for sublease, available, according to`~giires fram according to numbers from Cushman & MREi Tu.E PLiou, Iiloomingtc)n-based L?nited F'ropeities. efield. Dave Garland would say that in downtown [Chica- go}, it is more tech-related, but you also have some corporate downsizing creating some of the sublease space," says Marilyn "Probably 75 percent of the spaces that per, senior director at Cushman & we've gotten back are from technology Wakefield of IDinois Inc., in Roseznocit, Iwo, ~~mpanies;' says Dave Garland, vice Ares- ident of development for St. Paul-based CSM Corp. t'I,DC Telecommunications Inc. serves as an example of both situations. The com- July 23, 2001 Minnesota Real Eshate Journal Page l 7 real estate firm. Insignia/ESG in Chicago. Howard Meyer, senior vice president and Networking equipment giant 3Com director of leasing at U.S. Equities Realty .Corp. remodeled an office tower in Rolling Someone else's room LLC. Meadows, Ill., for its Midwest corporate Remember in college, when you sublet "The idea of having large rooms with headquarters in the late 1990s. The corn- that apartment for the summer and did not foosball tables and ping-pong tables does- . ,r~` ,tip pany now is trying. to sublease 170,000 realize you would be living with the origi- n't necessarily work for your traditional square fee[ in the 512,000 square foot nal renter's deaf sheepdog or his World of office tenant," he says. "I am speaking building; it simply does not need all that Cheese collection? somewhat tongue-in-cheek, but the space space, Lissner says. Subleasing can have similar pitfalls. design and the colors they choose can pre- Subtenants walk into a previously leased sent design challenges for would-be sub- . ~ "Probably 75 percent of with the conditions.nform or compromise tenants." ~ f ` ~ the spaces that we've "The idea of having large gotten back are from rooms with foosbal) tables technology companies." and ping-pong tables doesn°t necessarily work for PHOTO COURTESY OF CRESA PARTNERS '~aVe Car~and `"a Roger Christensen vice president of development your traditional office CSM Corp. munications equipment firm announced tenant." layoffs of 6,000 to 7,000 employees earli- er this year, reducing its requirements for :w space around the Twin Cities. ~ -Howard Meyer ADC leases a total of 1.8 million square Other open spaces already have new ten- senior vice president, director of leasing feet, including its new, 490,000 square foot ants. Duke-Weeks Realty Corp. recently , R, headquarters in Eden Prairie. Of that space, filled two floors in its 1600 Tower in St. ~ U.S. Equities Really LLC 400,000 square feet in four buildings is list- Louis Park. The space was vacated after ed for sublease. Web consultancy MarchFirst went bank- On the plus side, Lippman says, the "They took on some new space for rapt in April, says Norma Jaeger, Duke- Pr,oro couRTESV of ouKE-WEEKS REA~rv coRP. spaces often are 70 percent to 80 percent planned expansions, and then, because the Weeks senior leasing representative. Norma Jaeger open cubicle jungle, which gives the sub- telecommunications market softened con- MVP.com leased 33,000 square feet in tenant some flexibility. siderably, they did not need the backfill;' One Illinois Center in downtown Chicago, The extravagance of certain failed dot- says Roger Christensen, principal at then almost immediately leased the space "When you look at the tech sector and corns has been well-documented, but even CRESA Partners, a Minneapolis corporate to Web developer Digitas Inc., says Todd how it designs its space, you see it may not Lippman., executive managing director of be marketable to a typical tenant," Says TECHNOLOGY to next page Pegs 18 FOCLS. July 23, 2001 TECHNOLOGY ready to go." Subleases also might not appeal to Most of the influx of sublease space has That works fine if a business is vacating growing businesses with ever-expanding occurred during the last yeaz, says Dan the space completely, but in some cases, room requirements, Meyer says. Gleason, vice president at United Proper- the tenant and subtenant will be sharing an "The sublessor is not in the business to ties. But he says the amount of subleases address, and that can lead to complications. accommodate "changing space needs;' he has slowed in the past two months com- For example, the configuration of every- says. pared to the previous six months. thing from loading dock space to restrooms On the other hand, ashort-term lease Several leasing specialists agree real may not easily support two tenants. City might appeal to an early-stage company estate will recover more quickly than it did officials might have a few things to say with minimal resources, Frederiksen says. in the early 1990s, in part because the mar- about exterior signage and fire exits. Lenders are growing wary of small tech ket is not overbuilt. Instead, developers companies with big dreams and even big- provided a steady supply, only to face a ger financial requests. plummeting demand to match the plum- j We have this space that "lf a tenant does not have strong credit, meting Nasdaq. they might not have an alternative but to "This is not being driven by the real ~ was leased and not thought take a sublease;' he says. estate economy so much as the business economy;' Lissner says. "It goes back to Preferences vs. pocketbooks whether we think the stock market is at the of as o threat to developers, With all the inherent hassles, why do bottom, because they are related:' tenants even bother with sublease space? "My personal opinion is that we are just - and now it is coming back "The only advantage a sublease space kind of turning the corner," Frederiksen typically can offer is price," Frederiksen says, of the Twin Cities market. "Things says.. are about as bad as they're going to get, and rF~oioaxirtrES~ cx uraTeo rROPrRiiFS and competing with new "Companies are having a hard time leas- we've already seen the market pick up:' Don Gleason ing sublease space and they are having to Still, he says developers would be hard- bUlldingS discount. substantially;' says Lippman. pressed to go out and start new construc- Although it varies from office to office, tion in this market. 7rcf{NOtocr'tror„ previous page sublease rents average ~0 percent to 30 "We have this space that was leased and _ modest technology companies may leave -Scott Frederiksen percent off the original lease, he says. The not thought of as a threat to developers, and behind U~easures that they attach to the senior vice president tenant may not have a choice whether to now it is coming back and competing with lease, or sell for a nominal fee. offer a discount, especially if the company new buildings," he says. "Most of the space we have is not nec- Welsh Cos. LlC is in financial trouble. Lippman was less optimistic about the essarily in Class A buildings but it has "Some of the tenants aze dropping rates sublease market in Chicago. Class A, state-of-the-art finishes, with all to move the space, but tenants often want "It's hitting corporations and it is going of the latest technology, and that type of A final challenge comes with the terms the subtenant to pay the face rate they are to stazt hitting service firms that service infrastructure is usually desirable to non- of the lease itself. Renewal and termination paying;' Garland says. "In a lot of instances corporations. It's going to be a bloodbath techs as well as the techs," Garland says. rights often are based on the original lease, that is not realistic:' in terms of tenants having to discount," he "I've seen spaces available with brand- unless the subtenant can negotiate new Even bargain rates are not making the says. "We're not at the bottom yet:' new, Herman Miller cubicles that have terms with the landlord. If a seven-year space disappear from leasing agents' never even been lived in;'Frederiksen says. lease only has two yeazs to go, the sub- spreadsheets. Demand has not dried up Jessica Grijyfrh is a freelance in the Twin "You can bring in a photograph, set it on tenant may find herself shopping for anoth- completely, but it is slower than it has been Cities. the desk, plug in your laptop and you're er property in 24 months. in five years, Cazland says. Ptrps 10 Mitvrssab Red Estab lourml luly 23, 2001 e the years to come" (BOMA) International, a network of r Adair says commercial property man- more than 18,000 commercial real Key findings from the agars and builders should be concerned estate professionals worldwide. Terry Studley Inv.'s study how the supply and delivery of electric- Argue, chair of BOMA's Energy Com- ~~NetICt7Ql Outlook POWer demands IR itY affects their clients' businesses. Time mittee and president of Tulsa, Okla.- is money and time spent without elec- based Argue Properties, advocates rat- On PCW@t•• Z00 ~ .rr Midwestern cities are tric service can cost businesses millions ing the energy efficiency of commercial of dollars in revenue. According to the buildings using criteria developed by eXPeCted t0 InCreOSe the Development of new generation Studley study, financial service firms the Federal government. plants and transmission systems has emphasis On Working to lose between $5 million to $7 million an "Utilities consume the largest portion not kept pace with demand, whit:h is hour when a utility pulls the plug. of commercial real estate's operating void aCalifornia-like °How do you protect your client once expenses. Historically it's been between 'approaching capacity in several. the are in that buildin ° asked Adair. 25 and 30 ercent;' Ar tie sa s "In regions in the country, cleating' the erle Cr1515 For Y B•" P g Y ~Y "Who is responsible for that $5 million many parts of the country energy prices potential foroutagesand price spikes. COmmerci0l eltent5. to $7 million loss?'• have increased between 30 and 400 per- . pn increasing number of business- One way to prevent having to ask that cent in the past two years so that figure Gettin electricit used to be as eas question is to not sell clients on cities may be rising" es are assessing their vulnerability to as fl~ kin a switch. It re aired no that lack a reliable power supply. Unpredictable energy supply and cost Power interruptions and price volatili- 8 9 ty. Some national corporations are Tannin or consideration of the are two reasons BOMA is promoting the P B examining power issues when contem- provider's peak generation levels. That Co-gensroKan saves Energy Star label program as a way to plating a move. is no longer the case. Uncertainty in the Other ways include reducing demand standardize efficiency ratings in com- Midwest about the availability of elec- by designing energy efficient buildings mercial buildings. The Environmental • A typical tenant occupying com- tricity, the viability of transmission sys- and replacing inefficient lighting, heat- Protection Agency (EPA) and Depart- mercial office space now spends about toms, as well as the impact of deregula- ing and cooling systems in existing maul of Energy established Energy S[ar S2 to $3 per square foot per year on lion is creating anxiety where little commercial space. Reducing energy label criteria for commercial buildings electricity, depending on the market existed a few ears a o. consumption aids utilities by reducing and the designation will be available for 8 h,~ Y B and buildin The news is not all bad. A recent peak demand, but also pars money into retail stores and other building types study suggests that it is unlikely that a the pockets of building owners, man- within 18 months. Energy conservation and load sequel to the massive rolling blackouts agars or tenants. According to the EPA, the energy management efforts on commercial plaguing California will play in the In 1985 the Federal government man- efficiency of buildings is measured buildings could save hundreds of Midwest anytime soon. "National Out- dated its buildings implement energy using a l to 100 scale. Buildings in the megawatts each year, reducing costs look on Power: 21101;' a recent study management systems. These systems top 25 percent nationwide in terms of and bolstering dwindling reserve mar- conducted by the national tenant rep have reduced energy consumption by an energy performance (earning abench- gins. firm Studley Inc., found that major Mid• average of I S percent. However, the marking score of at least 75) and main- western utilities seem poised to meet the Studley study noted only 20 percent of raining an indoor environment conform- .Improved energy efficiency can growing demand for electricity through commercial buildings have even rods- ing to industry standards qualify for the substantially lower building operating' at least 2003. mentary energy management systems in Energy Star IabeL expenus, increasing net .operating "Overall, I think the energy outlook place. That low figure frustrates some Argue says the program is even more income and enhancing the asset value for the Midwest is fairly good;' says convectors. attractive because one of the tasks of a property. Geoff Adair, corporate managing direc- "Most building owners don't realize assigned to portfolio managers evaluat- for at Studley. "However, roblem areas that by spending an additional 8 to 10 ing buildings is identifying potential p • Long-term solutions to the current could be Chicago and Detroit. Both percent during construction they can energy savings. The EPA estimates the problems in electrical system reliabili- have high population denxity and ener- save 10 to I2 annually in operating cost to have a professional engineer ty include construction o! new genera- arpcndent business and industry:" costs;' says Vince Blake. a vice press- complete an Energy Star evaluation is lion facilities and expansion of trans- . 1 the study also found electricity dent of the Nu-Line Technologies. an up 1 cent per square foot gross. mission and distribution systems. priers in the Midwest are close to the electrical contractor and design and California's energy crisis and the dra- national average, with customers in IIIi- engineering company based in Wheel- matic run-up in natural gas prices last nois and Michigan paying slightly more tng~ III. winter is spurring interest in boosting and those in neighboring states a little lt's bottom line shortsightedness. the energy efficiency of commercial adding capacity to and updating electri- less. They just see it as a cost. But energy properties. "The impact of rising prices cal transmission systems. efficiency is a bottom line issue." is very clear. When your utility experts- "In the short term we have adequate Grid overload Lighting is the single largest draw on es go up it becomes a motivating factor power to serve our customers;' says Jim The primary challenge Midwest utili- electricity in commercial buildings, he to construct energy efficient buildings;' Alders, manager regulatory administra- ties face is moving electricity from says. Newer lighting systems can save Argue says. lion at Xcel Energy Inc. The company where it's generated to customers. Inter- 30 percent or more in energy cost and But conservation alone is not enough. provides energy to customers in Min- connection points in the national power consumption, heating and cooling sys- In addition to voluntary conservation nesota, and several other Midwestern grid are bottlenecking and overloading tams another 20 percent. measures, BOMA is urging Congress to and Plains states. "We are meeting that during peak usage. Two of those "load demand through a combination of our pockets' are located in California and own production and purchases from play a major role in the ongoing crisis independent producers:' to the Sunshine state. Similar roblems ~OW CIO OU fOteCt our client once the are in that pony has launched aggres- p y p y y The corn could occur in the Midwest if efforts to slue load management and conservation improve transmission systems lag. bUIICIIng? Who IS feSPOn516Ie fOf that $S mIIIIOn t0 $7 programs to hold demand under. the According to the study, capital spend- national average of about 2 percent. ing on transmission lines has dropped million IossZ" Forecasts are for energy consumption to by more than $100 million each year increase about 1.6 percent over the next since 1981. Belatedly, Midwestern alit- five years. If rntrect, Xcel expects to be hies are committing billions of dollars -Geoff Adair able to keep the lights on for its cus- ro replace aging and vulnerable trans- Comers. mission lines and systems. corporate monoging director Xcel's Achilles' heel is its transmis- Humiliated by a series of blackouts Studley Inc. sion system. Alders says it often oper- affecting more than 100,000 customers ales at almost 100 percent of capacity. in Chicago during the summer of 1999, An often-overlooked option is to enact an energy policy that ensures con- ••parts of our transmission system did ComEd, which serves about 3.4 million build in or install a co-generator that samara have access to adequate supplies not receive a lot of maintenance during customers in Illinois, has spent 51.9 bit- meets the average daily power needs of of reasonably priced energy by address- the late 1980s and 1990s. We need to lion in two years to upgrade its power tenants. Many units arc no larger than a ing energy supply and reliability. make significant improvements in our grid. After the 1999 outages, ComEd home air conditioner unit, Blake says. In corporate and multi-tenant build- transmission systems. We are working released an 800-page report at the urg- Using an on-site co-generator during lugs, a dependable energy supply is crit- with all of the transmission providers in ing of city and state officials that placed Peak power periods when prices for ital. Companies that operate within the upper Midwest to identify deficien- most of the blame for the outages on elecvicity are highest can shave 30 per- your facilities are more apt than ever to ties and put together a 10-year energy itself t'or neglecting to replace and prop- cent off those costs. A co-generator also be looking at dependability of energy plan" arty maintain its power lines and trans- eliminates power supply worries and supply when making a decision to In Illinois, ComEd is transforming formers. Similar outages have not been adds dollars to a lease or purchase price. locate or relocate in a particular city or itself from cone-stop electricity gener- ruled out for this summer. "If you arc a property manager leas- area;' Argue says. ator and provider into a delivery com- "Power is something we used to take ing space, you can add $I to 53 per pony. After the 1999 outages, ComEd for granted," says Adair. "Not any more. square foot [to the building's value] if Ufilities react became part of Exelon Corp. Exelan The situation in California was awake- You have an on-site generator," he says. Throughout the Midwest, utilities are Nuclear now operates the nuclear plants up call. The demand for electricity has shifting spending priorities to cope with formerly in ComEd's portfolio. ComEd grown 2 to 3 percent a year for the past Benehtnark slondards the changing energy landscape. Dereg- -also divested its fossil fuel generating 20 to 30 years. But in many areas of the Reducing energy consumption is also ulation is already hitting some markets, plants and is tapping into a portion of country the infrastructure is not in place a priority for members of the Building while its specter looms in others. Sup- the proceeds to overhaul its transmis- to meet growing electricity demands in Owners and Managers Association ply is generally less of a concern, sion system. July 23, 2001 Minnesota Rea161ata lountal pa9. 11 "We're in a deregulated environ- on electricity prices:' he says. "As new ment;' says Michael J. Finnegan, generation plants create additional sup- Prot@Cting Er1VIrOnTTlental R@SOUf C@S regional administrator economic Bevel- ply, prices could go lower." opment forComEd. •`We are going to be without Draining Yours a delivery service company. That's The outlook where our assets are and we need to Energy and real estate professionals make it work:' The company has pmured seem to agree that a combination of Liesch is afull-service environmental consulting and gI.9 billion into its transmission system long-term conservation and efficiency since 1999 and there is no cap on how strategies, investing in the transmission engineering firm developing on-going relationships much ComEd will spend to finish the infrastructure and loosening govern- with our clients as we provide them with job. ment regulations to spur energy produc- innovative solutions. Finnegan says that demand for elec- Lion can prevent aCalifornia-type ener- tricity in northeast Illinois was flat dart- gy crisis from happening in the Mid- ing 1999 and 2000, but is expected to west. ' • Phase Iql Environmental Site Assessme,rts -Solid/Hazardous Waste Services grow h}' about 2 percent this year. The "More utilities are going to commer- ~ . • Mergers/Acquisitions Due Diligence • Compliance and Permitting supply of electricity will continue to cial users and asking them to make • Groundwater/ Soil Remediation • wastewater Services meet demand and will improve as new efforts to reduce consumption by cut- • Waver Resources • OSHA providers enter [he market. flog rates fur reducing and controlling • Air Qualiey Detroit Edison is Corecasting similar their electricity use during peak times;' grz,wth in demand. The nation's sev- says Adair of Studley. "These steps may Please contact john Liehter, PE. at 800.338-79ta enthdargest electric utility, Detroit Edi- be inconvenient but they are better than ~ tL~Aroc~,•i•,,;i=.> • Em•1nce,; • F:n„ronmcnnl Sdrms. eon is the principal subsidiary of the suffering through rolling brownouts" newly created DTE Energy Co. Ron He adds that deregulation, whenexe- ~csa~~,o~s•,•zo3 ~::co•s,n•..,,,,~;a :3:,[,;,,,,..;,,:n,:,sds•,•..;:,~ Bauer, director of merchant operations, cured properly, benefits the commercial www.liesch.com Madnon, W~ s3m M:..~=,c,u, r.,=, spa, A; (E061 r23-1532 ]6]7 550.1.23 iAY.7 a3,.Ci~53 says peak use growth of 2.5 percent is real estate sector by providing a combi- expected during the next several years. nation of competition and additional From our present position we are generating capacity. Although some very confident we will have the supply people blame deregulation for Califor- to meet the load growth in our Cerrito- nia's electricity woes, it is working in ry;' Bauer says. parts of the northeast. ~ C OMMOI~TWEALTH Deregulation legislation signed into After helping prepare the "National law last year requires electricity produc- Outlook on Power: 2001" study, Adair lion. as measured by megawatts, stands on the middle ground concerning ~ ~T A increase by more than 16 percent. Bauer whether the Midwest will have a reli- L~Zl `I Dl 11 V lEF~ICA~ says that goal is realistic given the num- able, affordable energy to fuel growth. ber of electricity plants smaller comps- "'fire outlook is mixed. I'm nol a doom- nies plan to build. In addition, deregu- sayer, but the situation needs continual lotion mandated electricity prices for watching, and as real estate profession- business customers drop five percent als we must watch it. Our business, and beginning April I, 200E the businesses of our clients depend on Bauer says the anticipated increases j,:' -Grrgory Douglas Afford in supply and the ability of customers ~ to choose a provider beginning tan. 1, Gregory Douglns Aljord is a free- 200?, will keep downward pressure on (once writerjrom Rockford. IJI. electricity prices. think in the long term there will be downward pressure mg and sidewalks. L'ni[ed also added 17 skylights, created a new front entrance and gutted and remodeled the entire interior. Fro ! "We transformed a 30-yeaz-old building that had more of an industrial use into a "We're excited about this acquisi- firshclass office building that is the U.S. , lion;' says derick Wehba II, BFG headquarters for an international comps- , president. "We erested in looking at ny." Glows says. "We fumed it into awin- y much more pr Minneapolis:' win for all involved:' Resound favored the Wehba says the Angelis-based s-acre property, located just southeast of ~ company has closet million in the Interstate 494/35W intersection, over I ` assets and is a holding co ,though it newer buildings constructed along the I- TOM R@IChOw is selling off its smaller r menu in 494 strip, Glawa says. order to upgrade its p io to ReSound's lease rate with United Toni Reiehow Assistant Vice President sa one office/warehouse properties. reflected the cost of the improvements, t "We specialize in sing) t says Patrick Mines, NorthMarq Capital's good reason for working with Commonwealth otTice/warehouse space. We saw the s vice president and managing director in an excellent location and an excellent t Bloomington. The interior finish is consid- s s ant in Resound;' Wehba says. "We love th ered Class A, he says. I$; Stabllitye we were the first title company Minneapolis are gThat, all together. made NorthMazq's Rob Hervey in the New- formed III America, OVer lOO years ago. Many it an excellent ac uisition for us:' Wehba r Beach, Calif., office and Mines bro- says the company does not currently have d the financial vansaction for the things have changed during the development of any other properly in Minnesota. sale, hooking up BFG with GE Cap- BFG leased the property back to ital ~ ess Asset Funding Corp. in Belle- the title indUStry bUt One thing that vVill never Resound in a 10-year lease with renewal vue, options. Wehba says ReSound's lease pare- Mine s the one-year's profit from F meters remained the same as those the the sale is al for this type of a trans- Change IS gilallty customer Serncej Which has company had with United, which were pre- action" and seems high because the viously reported in the $10-plus per square property was aced for such a small been and continues to be paramount to our foot net range. BFG is not planning any amount. t• immediate changes to the one-story, "But the work t 'd was substantial;' SUCCeSS. 122,000 square foot facility. he says. "It would been Class B United bought the vacant building on space: The fact that the t was already July 3l, 2000. for 55.5 million, according in place raised the value o transaetimn, For more information please call: to county records. The company signed as we0. tenant GN Resound after i[ had purchased Resound combined its Min and 651_227-8571 the building, Glows says, then redeveloped Eagan operations and moved the the properly to ReSound's specifications. Bloomington (wilding in March. m- The renovations, totalling $5.1 million, pony is a manufacturer and distribu f 400 Sibley Street, N255 • St. Paul, Minnesota 55101 included new HVAC equipment, plumb- high-tech hearing aids with corpo ing, sprinkler systems, windows, landscap- headquarters in Copenhagen, Dentnazk. OUt Ot State/TOII Free 1-8S8-2S9-3334 Pags 12 Minnesota Rsa1 (slate Journal July 9, 2001 Wood~r~u O~~ ~p She says there are about 10 current Woodbury's population has doubled ~~o owners of the rezoned land. The city each decide from 1980 to 2000, grow- would be willing to work with individ- ing from 1©,297 to 43,819, and the pro- ualusers but would prefer to see a major jected population for 2010 is 60,924. developer take on the project and devel- Walsh says the proposed development CAMPUS DISTRICTS INCLUDE op a master plan, Schmitz says. will help Woodbury establish a solid INDUSTRIAL~OFFICE~RETAII The third proposed development site base of industrial companies and a sta- is approximately 150 acres of land ble population base, which will build a by Joyce Goodrich along Bailey Road near the Newport ~ good infrastructure for the city and a border at the current Bailey Nursery good tax foundation as well site. Schmitz says this site is a long- The city's comprehensive plan, The city of Woodbury is hoping fur a term goal. ' adopted last year, defines the city's whirlwind of development activity dur- Most of the Interchange and North goals for its work place as creating ing the next few years. 'east property is cutrently farmland with diverse employment options for resi- At aJune 27th meeting, the city rezoned a few scattered homes, Schmitz says. In dents and a sound economic base for the approximately 950 acres of land for busi- the Northeast development there are two city and county, increasing the job to Hess park development, opening it up to community uses as well: KOA Camp- housing unit ratio to 1:1, retaining exist- office, retail and industrial uses. ground and TC Silica pit, which is run- ing businesses and building attractive, "This is a smart move for Woodbury," ning out of mining material. signature developments. says Dennis Walsh of Walsh .Partners, a °`Rarely does an opportunity exist Approximately half the rezoned land Minneapolis-based commercial real estate where large, vacant land parcels are in is slated to be used for office develop- brokerage firm. He says it was "just amat- the vicinity of a major interchange," ment and half will be industrial and ter of time" before the land opened. up, according to Woodbury's Northwest associated development, according to especially with the current lack. of land far Area Land Use and Transportation Plan. the comprehensive plan. The land industrial development. Therefore, the city wants to be cautious should be "building intensive, not site "This is an unt±recedi~nted opportunity ' and proactive about what is developed intensive," meaning business use should for companies to gu out east without hav- there. ! occur inside the buildings with no out- ing to go to Wisconsin;' he says. "Especial- - The Tamarack Interchange area will door storage, loading docks, truck park- ly on one of the major arteries.' ' be used for what Schmitz refers to as ing or even large parking lots. The zoning includes three proposed "high-density/high-intensity" purposes. Phasing the developments is also development areas and development will be According to the transportation plan, ' important, says the document, in order phased, says Janelle Schmitz, Woodbury 'examples include offices, warehousing,. ' to "reduce the likelihood of premature economic development coordinator. light assembly and manufacturing. development and under-utilization of The Tamarack Road Interchange site on There will also be some retail, but it will the land" Interstate 494 is scheduled to be the first be limited to that which supports the "Woodbury has done a very good job developed. More than 100 acres of land immediate area and office concept, such in planning the community out there," between Valley Creek Road and the I- as restaurants, daycare centers, banks Walsh says, adding that most cities are 494/694 loop are currently undeveloped and a hotel. One of the goals is to devel- doing a better job at smarter develop- due mostly to difficult access, Schmitz op a large tax base for the city. ment. "They're not too anxious to rush says. "It certainly has great visibility and into it and then look back and say, `1 "Our hope is with greatly. improved access. The entire length is fronted on wish I would have..."' ~l access to the site it will spur development," I-94. There are fewer and fewer parcels she says. Groundbreaking for the new of land this magnitude available for road occurred at the end of June and is development," Schmitz says. "We're anticipated to be open to traffic in hoping to get a synergy going. If we get November 2002. enough of the right kind of users, they The largest rezoned area is the North- will build off each other." east Business Park with 700 acres of Other advantages for businesses, -land scheduled to be developed in 2003. Schmitz says, is a highly educated, "If the right user came along, we would strong work force. The Woodbury Com- probably be able to work with them to munity Profile says its work force pool get them in earlier," Schmitz says. How- includes 1.4 million people from. the ever, sewer, water and utili ies need to Twin Cities and western Wisconsin. be-added to the area prior to develop- "And there is not quite the traffic con- ment. gestion you see on the west side yet. The city i planning to meet with the We're hoping that will appeal to some current owners of both sites to support people," she says. the search for a developer and users. "We're not looking to buy (the land] as a city," Schmitz says. "We're looking to meet with the owners to discuss their plans and see how we can help them with marketing:' Minnesota Real Estate Journal July 9, 2001 THE FIGURES ARE IN The Minnesota totaling 217,000 square feet. The proper- development. Last fall the Met Council chapter of the National Association of ty sits within the Minnetonka Corporate approved more than $250,000 in cleanup Industrial and Office Properties (NAIOP) Center. dollars. presented its "2001 Industrial Mazket Meanwhile, ADC is in the process of "Working separately, we can accom- Update" in June. completing its approximately 500,000 plish good things," said Yanisch, in a pre- After describing redevelopers as "the square foot new headquarters facility in pared statement. "Working together with drunk drivers of the economic highway," Eden Prairie and has started to move the Council we can achieve remarkable metro experts took their turn using the employees into portions of the building. success in terms of restoring blighted terms "absorption down," "vacancy up," `Initially, we thought we'd use the areas and returning them to useful, pro- "sublease space high" and "industry [Minnetonka) space in some capacity. ductive properties" slowing:' However, with the industry slowdown in The Met Council also has approved Overall, industrial vacancy has reached the past six months, we can consolidate other projects for cleanup funding in double digits, the highest since 1993, our employees into our new world head- Minneapolis, St. Paul, Anoka and St. with a metro average of 10.8 percent, the quarters in Eden Prairie and in Shakopee Louis Park. DTED has approved addi- report says. The figure has steadily rather than maintain another facility," [tonal projects in Minneapolis, St. Paul, climbed from a decade low of 5.4 percent Grothaus says. Faribault, Duluth, Princeton and St. Louis in 1995. Regionally, vacancy in the The building will be vacated by mid- County. Northwest region and Airport South are August, says Roger Christensen, CRESA at the highest rates since 1992, with 11.8 principal, adding that potential buyers A DEDICATION CEREMONY was held percent and 15 percent, respectively. Fig- already are expressing interest. last month for the new Hennepin County ores for St. Paul East are also up at 7.7 "Its strengths include its location, adja- Public Safety Facility, a $96.2 million, percent and the Southwest has risen to cent to Interstate 494 and within the Min- multi-purpose complex in downtown e 11.9 percent. Minneapolis North, howev- netonka Corporate Center," he says, "and Minneapolis built to address jail er, has not succumbed to the pressure and it's an up-to-date headquarters facility overcrowding and space needs. The is at a three-year low of 7.7 percent, with amenities such as conference centers 397,000 square foot facility, officially according to the report. and a cafeteria:' Also, he says it is one of scheduled to open Aug. 1, features an While 9.1 percent of existing space few spaces available in the marketplace expanded booking area, 330 detention remains vacant, the statistics soar to 52.2 for a large user to move into right away. beds, three arraignment courtrooms and percent for new projects with the majori- According to Hennepin County court-related offices. The complex is - ty - 71.8 percent - in bulk warehouse records, ADC acquired the property, at located at Fifth Street and Fourth Avenue space. Overall net absorption has dropped 12501 and 12701 Whitewater Drive, last South. to 1.54 million square feet, the lowest in July for $18.1 million from Whitewater The architect was Minneapolis-based the decade study, from afour-year aver- Investments, a firm owned by Kim Culp Setter Leach & Lindstrom Inc. The con- ; .age of 3.9 million squaze feet. Minneapo- and Sheldon Wert of Century Bank in struction manager was Knutson Barton lis North, again, was the only metro area Eden Prairie (MREJ, 2-26-O1). The prop- Malow, Minneapolis. St. Paul Cos. was to go against the trend, boasting afour- erty's assessed market value is $17.5 mil- the insurance carrier for the development. year net absorption high of 940,00 square lion, according to county records. Also, there were 60 prime contractors 8 feet over last year's 165,166 square feet. and another b0 subcontractors working The number of new projects has CLEANUP GRANTS TOTAL $7.3 on the project. declined throughout the metro, as well, million. The Minnesota Department of Key players from Hennepin County though at a slower rate than vacancy has Trade and Economic Development include Sandra L. Vargas, county admin- risen. New bulk warehouse space, the (DTED) and the Metropolitan Council istrator; Richard Johnson, administrator current weakest overall product type, is have announced 14 cleanup grants in charge of the project; Robert Martin- down to a little more than 1 million totaling $7.3 million for redevelopment son, project manager and Tom Schultz, square feet from 1.5 million square feet projects in the Twin Cities and in Greater building operations manager. last year while the absorption rate has Minnesota. Combined, it is estimated that dropped to 1.9 percent from 6.9 percent the projects will clean up about 120 acres DID YOU KNOW? The International a year ago, the report says. Office ware- of contaminated land and create some Council of Shopping Centers (ICSC) house space is down 1.38 million square 1,200 jobs, paying an average hourly recently released The Impact of G feet from 1.77 million square feet with a wage of $19. Shopping Centers" study based on 3 percent vs. 4.5 percent absorption rate The funds, say Met Council and DTED information from 2000. Here's some and office showroom space is down officials, will initiate more than $220 mil- trivia: 742,064 from about 1.1 million square lion in private redevelopment investment •There are 45,025 shopping centers in feet with net absorption at .3 percent vers- and increase the net tax capacity by more the United States, 95 percent of which are ~ ` es 7.3 percent. than $5 million. strip malls. In 2000, 697 new shopping Absorption rates are also negatively DTED Commissioner RebeccaYanisch centers opened nationally. impacted with an abundance of sublease and Met Council Chair Ted Mondale •Minnesota has 69.7 million square space, and redevelopment is becoming announced the grants. feet of gross leasable shopping center more difficult because of high real estate The breakdown of the grants is $2.6 space, ranking 26th in the nation. From values, raised city expectations and new million from the Met Council's Livable 1999 to 2000, the number of Minnesota tax increment financing legislation. Communities Fund and $4.7 million from shopping centers increased from 472 to The good news? For industry profes- DTED's Contamination Cleanup and 484. There are no projected mall open- sionals outside of Minneapolis North, Investigation Fund. ings for 2001 or 2002. golf scores should improve dramatically Two of the sites receiving funding from • 3.4 million Minnesota adults shop in F, by the end of the summer. The informs- the agencies are the former American malls monthly, spending $15.3 billion tion is based on May 1 figures. Hoist property in St. Paul and the former annually in retail sales. Shopping centers Lupient Buick car dealership in Min- employ 150,500 Minnesotans. ' CUTTING BACK ON more space. ADC neapolis. The American Hoist site, which • Nationally, consumers stay an aver- ~ Telecommunications says it no longer is both agencies' top priority for cleanup age of 76.4 minutes per mall trip and visit needs its former Minnetonka funds, will be redeveloped by US Ban- 1.3 stores. In 2000, shoppers spent 7.3 headquarters space and put the facility on corp. The bank plans to build a 350,000 percent more at malls than in 1999. the sale block for about $20 million, square foot office building as the first In 195b, Minnesota made history confirms ADC spokesman Chuck phase of an urban village on the West when Southdale Center in Edina became Grothaus. Side Flats, relocating 1,700 employees to the first fully enclosed mall, constructed The company, a supplier of transmis- the site and adding another 700 new jobs. with two levels and two competitive Sion and networking systems, continues The. project will receive nearly $2.8 mil- department stores as anchors. Southdale to find ways to bring costs down as it is lion in cleanup funds. is currently the second largest shopping faced with lower-than-expected sales fol- Plans for the former Lupient site, now center in Minnesota with 1.2 million lowing a mazket slowdown. called the St. Anthony East Village Site, square feet. Other recent ADC space reductions include the development of 30 affordable • Bloomington's Mall of America, built include suspending construction- of a housing units, 48 townhomes and 96 con- in 1992, is the largest shopping center in 500,000 square foot, $70 million office dos as well as office and retail space. The the nation with 40 million visitors annu- ; and manufacturing facility in the Valley project will receive nearly $1.6 million in ally and 4.2 million square feet (2.5 mil- Green Business Pazk in Shakopee (MREJ, cleanup funds from the agencies. lion square feet is retail). However, West 5-16-01) and putting on the market about A third redevelopment receiving dual Edmonton Mall in Alberta, Canada, holds 150,000 square feet of sublease office funding is the Near Northside Housing the overall North American title with 5.5 space in two buildings in the park. project in Minneapolis. DIED has million square feet. Minneapolis-based CRESA Partners is approved more than $250,000 to clean up •ICSC was founded in 1957 and has marketing the former headquarters facili- part of the 21-acre site, located just north 39,000 members in 77 countries. ty, composed of two linked buildings of Olson Memorial Highway, for housing ew X • A cut in the tax rate on personal proper- . ty for uhlrty companies will result m an esti- BUS111CSS had dISSp[)OIIIhIIep~ mated $30 million saving. That savings will While business leaders are praising the go directly to ratepayers because the final property-tax achievements, the extend• S ~ Legislature.is mandating a dollaz-for-dollar ed legislative session ended in disappoint• pass-through to customers. ment on two other tax fronts: corporate • Businesses also will benefit from elim- income tax and health-care taxes. ~ ~ ination of the June accelerated sales tax pay- Businesses had hoped the state... woulc O~ ment, which amounted to a forced loan to shift the corporate income tax completely tc the government of tax money that hadn't a sales-based tax and away from also taxing been collected yet. property and payroll, both of which place a While businesses are receiving roughly a greater burden on businesses based here. • 10 percent overall property-tax cut, home- "It puts the home team at a disadvantage, owners will be receiving property-tax cuts and fixing it would level the playing field," on average of 22 percent. The cuts were ere- Benson said. "It's clearly discriminatory the ated by the state taking over payment of way it's done now." state-mandated K-12 education expenses. Blazer said corporate tax reform was a By John Hoogesteger Business owners see the big cut for .victim of the extended debate needed to pass Swff reporter homeowners as a plus, too, Thiss said. property-tax reform. Rachel Fitzgerald, president of St. Louis Park-based "Affordable housing has been a major prob- `'If they had finished on time, the amount J&F Reddy Rents Inc., knows what passage of the state lem for businesses in some communities." available for tax relief would've been $900 tax bill means for her business. million. During the extension, the available "We'll save about $5,(x1(1. That's money I can use to bUS1I1@SS taX amount was adjusted down to $700 million;' buy another piece of rental equipment or another car we In order to avoid giving business owners Blazer said. "When that happened, it can rent. It will help us get something we can use in the a 25 percent break in property taxes when it became tough to do anything other than the business;' she said. "Or I can use it to help keep up with shifted K-12 expenses - a move viewed as property-tax reform" the rising cost of health care:' lrtrcall unacce table -the state created When legislators go home, Blazer thinks Likewise, Scott Thiss, CEO of S&W Plastics in Eden iPs own property tax on businesses and recce- they will hear from small business owners Prairie, will reinvest the savings in new. technology and about the failure to cut health-caze taxes. robotics. "We tom to in a lobal market lace, and this ational property. ~ g p The tax will be levied at the county level "The cost of health care is creating con- will allow us to be more competitive," he and show up as a line on property-tax bills. straints on small businesses, and then you said. Creation of a new tax creates some con- have the state adding to that burden by tax- Business leaders across the state are terns for the business community, which mg it;' he said. heralding the tax bill, not only for its imme- womes that it may be an easy tazget when On the other hand, business owners were diate impact -estimated to be about $275 the state needs more money because it will Pleased that one tax proposal fell out of the million to businesses statewide -but also be easier to raise business taxes than indi- Prcture: the plan to expand the sales tax. for its long-term reform. vidual taxes. Businesses were opposed to having bust- . "This really represents a monumental But in past economic downturns, the ness-to-business transactions taxed, Blazer change in how we collect and spend proper- state has not raised the existing corporate said, adding, "I wouldn't be surprised to see ty taxes," said Duane Benson, executive income tax, Blazer said, "so it's not afar- it back in 2002" ¦ director of the Minnesota Business gone conclusion that the business property John Hoogesteger con be reached at (612) Partnership. tax would be an easy target:' 288-2106 or jhoogesteger@bizjoumals.com. Bill Blazer, senior vice president of the There is an advantage to having a Minnesota Chamber of Commerce, said the statewide business property tax, too, Thiss "significant restructuring of the property-tax said, because it gives businesses a statewide system" and its long-term impact on bust- forum to keep them under control ness may be more noteworthy than the Historically, Benson said, if businesses immediate savings. wanted to try to control property taxes, they Historically, he said, business has repre- had to go to the city council or county tom- sented 15 percent of the tax base, but has mission. been paying about 30 percent of the tax bur- "They had to face people who very likely den. Under the reforms, as the tax levy also were their potential customers and grows in the future, businesses will be debate with them. That always put them in a t:~~S represents a responsible for paying about 24.5 percent. quandary," Benson said. `At the state level, "It hasn't been proportionate. The bill we'll be able to spend more time dealing ~~,N will narrow the gap between business' shaze with the property tax than we could dealing monumental Change of the tax base and its burden by about 25 with more than 1,000 political jurisdictions:' percent," Blazer said. Jenny Engh, assistant revenue commis- ~ l1OW We Collect Here's how the immediate $275 million stoner, said businesses will stilt pay all local and Spend property in business-tax savings breaks down: property taxes, so they still must pay atten- • Businesses can look forward in 2002 to lion to what local officials do to the tax levy. an estimated $180 million in immediate taxes." property-tax relief. • Substantial cuts in property taxes on apartments arc expected to generate about Duane Benson $67 million in relief for apartment owners. IXECIlTIVE DIRECTOR MINNESOTA BUSINESS PARTNERSHIP fed,~.~~~t~. NINTH DISTRICT FEATURE lutvPzoatb Considering By DOUGLAS CLEMENT systems have been installed in the ele- Senior Writer the alternatives mentary xhool in Onamia, as well as in homes near Princeton. is no news [o anyone that energy • The Phillips Eco-Enterprise Center in prices have soared over the past year. Minneapolis heats and cools its 24,000• Oil is up, natural gas is way up, gaso- ~ square-foot facility with a computer- line may reach $2 a gallon this summer, ~ controlled geothermal system, which and you may be paying a lot more For ~ helps cut monthly energy bills from electricity than you used to. $2,500 to $1,000. With conventional fuels so expensive, energy producers and users are respond- i NOC easy being gT'eerl ing as people always do when prices rise: ~ They look fur alternatives. And in this None of these technologies is revo- case, those alternatives nrn the gamut lutionary-some are quite ancient. But from high-tech solar panels to your basic By DOUGLAS CLEMENT they're all getting serious consideration, cow manure. People are even consider- Senior Writer and many have attracted significant ing-gasp--conservation. In the Ninth funding. District state and local policy- District, where hardscrabble necessity fills nationwide-two of them in the lankton counties, to be placed in a 22- makers have encouraged development has always been the generous mother of Twin Cities-enough to power 100,000 mile line and capable of producing 200 of many of these alternative energies invention, there is a wide range of alter- homes, according to the company. megawatts. Up [0 2,000 wind turbines with a mix of mandates, subsidies and native energy initiatives. Here is a There are currently about 300 landfill that would produce 3,000 megawatts are simplejawboning. sampling: gas utilization projects in the United envisioned-mostly in Jerauld, Hand But the same strong market signals that States, and the Environmental Protection and Hyde counties. have brought renewed attention to alter- Biomass Agency has identified another 600 • By the end of 2002, California develop- native energies are also calling new potential sites. ers hope to build as mama as 50 windmills resources into development of conven- Anything that is, could have been, or • Several energy projects use, or plan to just north of Uelva, N.D., one of the tional energy sources. Power Companies used to be a plant, but is now being use, cow and pig manure to produce state's windiest locations. Arid the state's harre announced 90,000 megawatts of add- burned to produce energy tan be con- methane, heat and electricity (see 19innkota utility is currently erecting a itional electricity generating capacity in sidered a biomass fuel. Trees, seeds and "Cleaning up" on page 12). Manure 300-Coot turbine near Oriska. the next 18 months. Natural gas compa- manure all quality. from about 900 cows or 4,400 pigs is • West Fargo's DMI, formerly a sugar nies increased pipeline additions by 115 • In St. Peter, Minn., Energy Perfor- needed to power a 40-kilowatt generator. beet machinery manufacturer, built 14 percent this year and are planning a multi- . manse Systems recently signed a • A British firm h building a $100 million wind nrrbine towers in 1999, expects to bdliondollar pipeline from Alaska. Oil contract with Xcel Energy co build a 50- turkey manure and alfalfa burning plant ship 150 in 2001 and guesses it will build companies aze feverishly adding new rigs megawatt power plant that will burn in Benson, Minn., that wi8 generate 50 about 3W in 2002. and enhancing refining capacity, and coal whole, fast-growing poplar trees. megawatts and begin operation in 2002. • To address a lack of transmission capac- mines aze desperately seeking miners. • Ravalli County in Montana is looking • American Energy Systems in Hutchin- ity, a $4.5 million initiative announced by Wholly independent of presidential into a biomass electricity generator that son, Minn., expects to self 5,000 Minnesota's McKnight Foundation w7II polities to address the "energy crisis," would use thickets of thin, nonmar- corn-burning home furnaces in 2001, up look at issues surrounding the building the industry is evidently reacting to ketable trees and small scrap left over from 1,000 last year, and is negotiating of power lines and explore the capacity climbing energy prices by building from timber operations. A citizens group with manufacturers to build as many as of wind power to generate rural jobs, greater capacity. The industry read the in Missoula is exploring similar options 50,00(1 units. The company estimates • Montana has relatively little wind opposite signals in the late 1980s and on school trust lands. that burning corn (at about $3 per mil- power, but a new law encourages more early 1990s, when low oil and natural gas • A $52 million power plant Fueled by lion BTU) is half as expensive as fuel oil by extending the state's current wind prices led to little exploration, few Y75,000 tons oC waste wood annually is and a seventh the cost of electricity. energy tax credit from seven to 15 years pipelines and modest refining capacity. planned for downtown St. Paul. The for wind farms based on Indian reserva- Then demand expanded far beyond pro- plan[, touted as the largest biomass-fired Wind ower [ions. The Fort Peck tribe recently jections, as the economy grew faster than districtcnergy system in the country, will p completed a feasibility study fora 200- anyone expected. provide both heat and electricity. Wind power has taken off in the Ninth megawatt wind farm in northeastern The Department of Energy projects • In April, the University of North District since the topic was covered at Montana, and the Blackfeet Indian that American consumption of energy Dakota, Grand Forks, tested a biomass length in the fanuary 2001 jalgavtre (nn Reservation is planning to provide 22.8 from renewable sources will increase 26 "co-firing" scheme, adding sunflower the Web at minneapolisfed.org). megawatts to the grid by late in 2002. percent by 2020, but the renewable share hulls to the coal in a university steam • [n April, Northern Alternative Energy of the total energy consumption pie wiil boiler. A similar test planned at the State dedicated the firs[ utility-xale wind cur- GeO~lermal actually decline slightly, from 6.9 percen+; Penitentiary in Bismarck will mix wood bine in the Twin Cities area, a 213-foot to 6.5 percent, as natural gas and petrole- chip waste with coal to produce both high turbine in Elk River that will gener- Geothermal technology uxs pumps and um become still bigger sources of power. heat and electricity. ate enough electricity for 120 homes. closed-loop pipes buried in the ground In responding to the current ent:gy • The Barnesville School District in Northern Alternative entered a contract to extract heat from the earth in thewin- shortage, policymakers may wish to pm- Minnesota has saved about 20 percent with Xcel Energy this year to proride ter and return it in the summer, der which of the alternative energy on its heating bills by burning sugar beet about 130 megawatts of wind power to prodding year-round low-cost heating initiatives will remain economically seed xreenings and sunflower hulls in the utility. and cooling. attractive once new sources of conven- furnaces at two school buildings. The • Also in April, Xcel selected Chanaram- • Geothermal heating is gaining atten- [ional energies tome on line and prices seeds are a waste product from nearby bie Power Partners to develop another 80 [ion in North Dakota, according to the dexend from their peaks. Then again, American Crystal Sugar Co., and the megawatts ofwind power in Pipestone and Capital Electric Cooperative in Bismarck, they might well decide that a diversity of sunflower hulls are purchased as pellets Murray counties in Minnesota. which has installed about 100 residential energy sources provides a measure of sta- from aMapleton, N.D., company. • In South Dakota, Clipper Windpower systems in the area as well as several busi- bility and flexibility that's worth a few • The NEO unit of Minneapolis-based announced plans in April to build 133 ness units. extra bucks. D NRG Energy taps methane from 321and- turbines in Hutchinson, Turner and • In Minneota, sophisticated heat pump http://twincities.bcentral.com CityBuSllt@SS June 22, 2001 7 Holding company forecasts four more Twin Cities branches in five years • ~ kev~~e location u~+es La Anchor Banco sec _ _ DIANA WAITERS By John Hoogesteger in 'Wayzata, St. Paul, West St Paul and fishing a significant footprint in a connnu- '44~'" R Scaff reporter Farti~ington as well as Heritage Back in Wily. can help attract small business cus- When Anchor Bancorp Int.'s new North St. Paul.. tourers. I , 21,000-square-foot bank. opens later this "We look for a ~~ood business base and ":Small business customers are more year in Lakeville. the Wayzata-based hold- for places with locally owned and managed inclined to notice. They are looking for in com an will have 12 locations spread businesses;'' said Rick Bliss, president of bankers who are solid, reliable and trust- g p Y e across the Twin Cities. Anchor Bank Natt~nal. worthy, and it always helps to have a , ub- ~ It represents the latest in ongoing Like most community banks in the Twin stantial presence to reinforce that image;' growth for the bank holding company, Cities, Anchor specializes in small-business Crabtree said. ~ which has built three other branches since lending,. focusing on the high-attention Surreys show only one in five small ~ 1997 in tipple Valley, Woodbury and St. service those customers desire but often business customers are primarily driven by , ~ Paul Park.. cannot get at large batiks. price, Crabtree said, and most are looking In the past year, the, bank. also has One way Anchor attracts Chose cus- for gone-on-one relationship where they ~ opened afive-person tnlsk departmerit and tourers that sets .it apart from other commu- know the banker and can count on quickly T 'i three part-time banking branches in senior pity hanks is that it enters a city with afull- being extended credit when it's needed. ' i + living centers. sized bank building complete wfth full Anchor Bank leaders try to reinforce And the company expects to acid four staff. For example, the Apple Valley bank is that: relationship by hiring bankers who stay more br mehes in the next five years in 45,000 square feet. with the company, Hawkins said. a ~ other 'I`win Cities communities, said Carl Jones doesn't believe in entering acorn- "We have consistent service, philosophy ~ ~~i Jones, pres~irient and chief operating officer. munity with a 1,500-square-foot "box on a and staff. When our staff comes, they stay a ~ "We will continue to grow. There is no corner" office. "It's a way to signal to the long time, and when customers come here, question. in my mind about that," Jones community that we're there Co stay and to they stay for years and years:' he said. ~ said. `"The metro area is vibrant. And con- make an investment in the community," Jones added: "I can't stress enough that I timed consolidation by the big banks gives Jones said. it's the people who work here that have us more opportunity" Jeff Hawkins, ,president of Attchor Bank made the bank what it is" The bank's assets have grown from $426 West St. -Paul, said afull-sized bank also The bank's commitments include that it million in 1996 to $647 million in 2000. allows Anchor Bank to have complementary is not for sale. Jones is second-generation Although specific locations haven't tenants, such as lawyers and accountants. management of the mostly family-owned '1; been identified for expansion, the pattern "If you're always walking through our bank, following his father and bank chair- has been to look for communities fitting the lobby on the way to visit your lawyer, it man Winton Jones. bank's demographics that aren't too far becomes a logical next step to do your "We're in this for the long haul;' he Carl Jones said Anchor enters cities from one of its five main banks, which each banking there," Hawkins said. said. ~ with full-size buildings and full staff to have maintained a separate charter since Ben. Crabtree, a banking analyst for St. John Hoogesteger can be reached of (6 J 2) signal the bank's there to stay. they were acquired: Anchor Bank National Paul-based Advantus Capital, said estab- 288-2106 or joogesteger@bizjournals.com